May 252016
 
 May 25, 2016  Posted by at 1:31 pm Finance Tagged with: , , , , , , , , ,  


G.G. Bain Immigrants arriving at Ellis Island, New York 1907

There’ve been a bunch of issues and topics on my -temporarily non-writing- mind, and politics, though as I’ve often said it’s not my preferred focus, keeps on slipping in. That’s not because I’ve gotten more interested in ‘the game’, but because the game itself is changing in unrecognizable fashion, and that is intricately linked to subjects I find more appealing.

For instance, in the past few days, I’ve read Matt Taibbi’s epos on the demise of America’s Republican Party in R.I.P., GOP: How Trump Is Killing the Republican Party, and Shaun King on a similar demise of the Democrats in Why I’m Leaving the Democratic Party After This Presidential Election and You Should Too, and both make a lot of sense.

But I think both also miss out on the main reason why these ‘demises’ are happening. In my view, it’s not enough, not satisfactory, to talk about disgruntled voters and corrupt politicians and the antics of Donaldo, and leave it at that. There is something bigger, much bigger, going on that drives these events.

But that I will explain in a later article (soon!). Right now, I want to address another piece of the same pie (though it’s perhaps not obvious that it is): the Brexit ‘discussion’ in Europe. A May 11 piece by ex-World Banker Peter Koenig provides as good a starting point as any:

The Collapse of the European Union: Return to National Sovereignty and to Happy Europeans?

Imagine – the EU were to collapse tomorrow – or any day soon for that matter. Europeans would dance in the streets. The EU has become a sheer pothole of fear and terror: Economic sanctions – punishment, mounting militarization, the abolition of civil rights for most Europeans. A group of unelected technocrats, representing 28 countries, many of them unfit to serve in their own countries’ political system, but connected well enough to get a plum job in Brussels – are deciding the future of Europe. In small groups and often in secret chambers they decide the future of Europe.

Koenig makes much work of connecting what’s bad about the EU, to the TTiP and TiSA trade deal negotiations. And though the TTiP deal has lately come under rapidly increasing fire in Europe, that is a relevant point. Koenig also, perhaps more importantly, concludes that the EU has no future.

If the TTIP is ratified despite all logic, and if subsequently the EU fell apart – each country would still be held accountable to the terms of the agreement. Hence, time for an EU collapse before signing of the TTIP and TiSA is of the essence. This radical solution may be too much even for staunch EU / Euro opponents. Many of them still seek, hope and dream of a reformed EU. They still live under the illusion that ‘things’ could be worked out. Believe me – they cannot.

The Machiavellian US-invented venture called EU with the equally US-invented common currency – the Eurozone – has run its course. It is about to ram the proverbial iceberg. The EU-Euro vessel is too heavy to veer away from disaster. Europe is better off taking time to regroup; each nation with the objective of regaining political and economic sovereignty – and perhaps with an eye a couple of generations down the road envisaging a new United Europe of sovereign federal states, independent, totally delinked from the diabolical games of the western Anglo-American empire.

That last bit is- or should be- highly relevant to the Brexit discussion that’s ongoing in Britain, working up to an undoubtedly grotesquely clownesque climax on June 23, the day some 40 million by then supremely confused Britons get to vote. Koenig’s last words also contradict the goals and aspirations of Yanis Varoufakis’ new initiative DiEM25, which seeks to democratize the EU from the inside out.

Now, I appreciate Yanis quite a bit, and certainly much more than most Greeks seem to do these days, but ever since DiEM25 announced itself I haven’t been able to keep from thinking: have you looked at the EU lately, like, really looked? I get the idea, obviously, but why would you, to use a convenient metaphor, want to go through the trouble of renovating a building that’s been structurally condemned for good reasons, instead of tearing it down and build a new one?

The only reason I can think of is that DiEM25 thinks the building is still salvageable. Question then: is it? And that’s a question Britain should ask itself too in the run-up to June 23. If you vote yes, what exactly are you voting to belong to, what -sort of- edifice are you electing to continue living in? A delapidated structure bound and waiting to be torn down? If so, why would you do that, and what would be the consequences?

And what about the alternative, what if you voted to leave the building? It’s not as if the present EU is the only way for European countries to work together. There are a zillion others, and arguably some of those might actually do what the EU portends to do but is failing miserably at: that is, prevent violence from breaking out. The narrative of Brussels as a grand peacemaker sounds less credible by the minute.

It is perhaps open to personal interpretation, but when I look at what the EU has done, and is still doing to Greece, the country I’m visiting again trying to relieve some of the pain inflicted on it by the EU, and I look at how the refugee issue has been handled by ‘Brussels the peacemaker’s actions and inactions, causing thousands of deaths and infinitely more misery, you’d have to be a darn great orator to make me support the what I have come to call Unholy Union.

What Greece shows is that there is no Union, other than in times of plenty. What Aylan Kurdi and the sorrowful litany of other drowned toddlers of the Aegean show is that there are no moral values inside the -leadership of the- Union. One drowned child can be an accident. Hundreds of them constitute criminal moral deficiency.

Of course you can argue that since Britain’s handling of the refugee crisis is just as obscene as the rest of Europe’s, this is not in and of itself a reason to vote Leave, but it’s no ground to vote Remain either. If anything, it’s a reason to indict politicians across the European board. Their behavior contrasts sharply with that of many of their constituents, as countless stories testify and as I’ve seen in such sparkling bright light here in Athens.

But we can take this back a few steps. I was surprised to see PM David Cameron appear as the big voice for “Remain”, for the UK to stay within the EU. Cameron was never exactly a fan of the Union. And as the Daily Mail observes, just 6 months ago Mr Cameron “declared there was ‘no question’ that Britain could survive and do well outside the EU.”

But then, he’s a man who’ll happily blow along with whatever wind is prevalent. I was even more surprised to see Boris Johnson try to take the lead of the “Leave” side, because Boris, a weather vane as much as Cameron, had always belonged to the same side as the latter on everything, and now suddenly differs on Remain or Leave. A shrewd career gamble?

The British Conservative Party has managed to corner the entire debate, both yes and no, between them. I mean, kudos and well done old boys, but what a farce that is. Labour’s Jeremy Corbyn sides with Cameron’s Remain side, without wanting to, but has failed utterly to make sure he has a realistic part in the discussion. Exit Jeremy. Where was their spin team when Corbyn fell into that hole?

Of course, there’s Nigel Farage and UKIP, but Nigel will forever be a fringe character. Which is not necessarily a bad thing, by the way; the British Lower House is not that fine of a place to sit in on a daily basis. Whenever I see footage of it I can’t help thinking AA meeting for masochists.

Farage’s main contribution to the discussion will forever be the countless YouTube clips in which he very succinctly explains how dysfunctional the European Parliament he is (was?) a member of, is, to the very same parliamentarians. Maybe more Brits should watch those and think again about what their vote is about.

An apt comparison would seem to lean towards a Tower of Babel much bigger than the original one, and in which between mountains of paper not a single scrap can be found that pertains to the prevention of poverty, misery and the drowning deaths of 4- and 5-year olds. Or at least such, most basic, principles are nowhere near the top of any lists.

Inside the pretend Union, it is obvious that the people of Germany, Holland, France find their own children’s lives more valuable than those of other children. And their futures too; half of Spanish and Greek youngsters are out of work and out of a future. And Brits are asked to vote to keep that demonic apparatus intact and join the oppressors.

Framing it in those terms also tells you something about the DiEM25 question: is it worth one’s while to try and democratize the EU from within? Given how entrenched the predators vs prey positions have become, and how unlikely the predators are to defend their advantages tooth and nail, and how their ‘chosen’ people have taken over Brussels, does that look like a project to put a lot of energy in?

The Euro is just 15 years old, but the EU goes back many decades. Strategic positions have long been taken in trenches that have long been dug. Is that the fight you want to fight? There’ll always be a Europe, but there’s nothing inevitable or incontrovertible about the EU, or about Brussels being its capital. All it takes is perhaps for one country to say “Thanks, but no, thanks.” The EU for all its bluster is very vulnerable.

So there’s your voting options. But it should be clear that the Brexit vote is headlined by the wrong people, for all the wrong reasons, and with all the wrong arguments. It can’t be exclusively about money, but it is. And if the Unholy Union falls apart sometime further down the line regardless, a vote for Remain on purely financial grounds will take on a whole different light: wasted energy, wasted money, wasted morals.

Besides, nobody knows what the -financial- effects of a Brexit will be, and any claims that are made to the contrary are just guesses based on whatever political -career- preferences the person or institution making them has. ‘Things’ ‘could’ crash on Trump victories and they could crash on Brexit, but any numbers attached to these potential events are 100% made up. It’s hilarious to see Treasurer George Osborne declare with a straight face that a Brexit would cause UK home prices to fall by 18%, but that’s all it is.

First question is: you sure it’s not 18.5%? What genius advisor came up with that number? Or did they have a committee of wise men in a week-long cigar-fueled brainstorming session that split their differences? Second question: do you guys realize that falling home prices are exactly what at least half of Britain is looking for? That distorting your real estate market to the extent that nobody can afford a home anymore is a dead-end street that kills cities and communities and people in the process?

I should stop here right? I can write a book about this, not because Brexit is such a huge subject (just see if anyone in Europe cares), but because the EU is such a yuuge disaster, and there will be many more opportunities to return to the topic. I have tons more little notes scribbled down, and a flood more crazy claims and comments will be made by various parties in the ‘fight’. Just wanted to say that this whole ‘debate’ -if you can call it that- has so far been very different from what it should have been.

Why would you want to belong to a team like the EU? I know that Cameron does, and so does Corbyn, but none of that is reason you should too. Nor should you want to ‘Leave’ because Boris Johnson wants to. You need to look out over the whole landscape. But that’s just me.

Jan 312016
 
 January 31, 2016  Posted by at 10:07 am Finance Tagged with: , , , , , , , , , ,  


Edwin Rosskam Shoeshine, 47th Street, Chicago’s main Negro business street 1941

A Chinese Banker Explains Why There Is No Way Out (ZH)
China GDP Growth 4.3%, Or Lower, Chinese Professor Says (WSJ)
Yuan Vs. Yen: How China Figures Into Japan’s Negative Rates (WSJ)
IPO Market Comes to a Standstill (WSJ)
Greece’s Lenders To Start Bailout Review On Monday (Reuters)
Milk Collapse Brings a 45% Pay Cut to England’s Dairy Farmers (BBG)
‘Peak Stuff’ And The Search For Happiness (Guardian)
Merkel Says Refugees Must Return Home Once War Is Over (Reuters)
10,000 Refugee Children Are Missing, Says Europol (Observer)
Aegean Sea Refugee Crossings Rise 35 Fold Year-On-Year In January (Guardian)
Greeks Worry Threatened Closure Of EU Border ‘Definition Of Dystopia’ (Guar.)
Europe’s Immigration Bind: Morals vs Votes (Guardian)
39 Greece-Bound Refugees Drown Off Turkish Coast (AP)

“It’s not difficult to issue more loans, but let’s say in a years time when the loan is due, if the borrower defaults, then I won’t just see a pay cut, I’ll be fired, and still be responsible for loan recovery.”

A Chinese Banker Explains Why There Is No Way Out (ZH)

Friday’s adoption of NIRP by Japan, which send the US Dollar soaring, has only made any upcoming future Chinese devaluation even more likely. But whether China devalued or not, one thing is certain: it is next to impossible for China – under the current socio economic and financial regime – to stop the relentless growth in NPLs, which even by conservative estimates at in the trillion(s), accounting for at least 10% of China’s GDP. Sure enough, a cursory skimming of news from China reveals that even Chinese bankers now “admit the NPL situation is dire, but will keep on lending” anyway. As the Chiecon blog notes, NPL “ratios might be closer to 10%… supported by revelations in this article, where Chinese bankers complain of missing performance targets, spiraling bad loans, and end of year pay cuts.”

“Right now, we’ve nowhere to issue new loans” said Mr. Zhang, a general manager in charge of new loans at one of the listed commercial bank branches. Zhang believes NPL ratios have yet to peak, with SME loans the worst hit area. Ironically this has forced Zhang to direct lending back to the LGFVs, property developers and conglomerates, industries which the Chinese government had previously instructed banks to restrict lending to, based on oversupply and credit risk fears.

But the main reason why China is now trapped, and on one hand is desperate to stabilize its economy and stop growing its levereage at nosebleed levels, while on the other hand it is under pressure to issue more loans while at the same time it is unwilling to write off bad loans, can be found in the following very simple explanation offered by Mr. Zhou, a junior banker at a Chinese commercial bank.

“If I don’t issue more loans, then my salary isn’t enough to repay the mortgage, and car loan. It’s not difficult to issue more loans, but let’s say in a years time when the loan is due, if the borrower defaults, then I won’t just see a pay cut, I’ll be fired, and still be responsible for loan recovery.”

And that, in under 60 words, explains why China finds itself in a no way out situation, and why despite all its recurring posturing, all its promises for reform, all its bluster for deleveraging, China’s ruling elite will never be able to achieve an internal devaluation, and why despite its recurring threats to crush, gut and destroy all the evil Yuan shorts, ultimately it will have no choice but to pursue an external devaluation of its economy by way of devaluing its currency presumably some time before its foreign reserves run out (which at a $185 billion a month burn rate may not last for even one year). However, before it does, it will make sure that it also crushes every Yuan short, doing precisely what the Fed has done with equity shorts in the US over the past 7 years.

Read more …

While still ‘assuming the official agriculture and service sector growth figures are correct’.

China GDP Growth 4.3%, Or Lower, Chinese Professor Says (WSJ)

As growth in the world’s second-largest economy slows, the spotlight has intensified over the accuracy of China’s growth figures. This week, Xu Dianqing, an economics professor at Beijing Normal University and the University of Western Ontario, joined the debate with an estimate that China’s GDP growth rate might just be between 4.3% and 5.2%. China’s official growth rate in 2015 was 6.9%, the slowest pace in more than two decades, allowing the government to hit its target of around 7%. But longstanding questions over China’s statistical methodology have spurred a cottage industry in alternate growth indicators. Many of these analyze other measures believed to be less subject to political pressure in estimating actual growth, including indices compiled by economists at Capital Economics, Barclays Bank, the Conference Board and Oxford Economics.

Most peg China’s annual growth in the 4% to 6% range. Mr. Xu told reporters at a briefing this week that the focus of his concern is the growth rate for China’s manufacturing sector, which according to official figures grew 6.0% last year and accounts for 40.5% of the economy. A closer look at underlying indicators, however, including thermal power generation, railway freight volume, and output from the iron ore, plate glass, cement and steel industries released monthly by the National Bureau of Statistics paint a different picture, he said. Of some 60 major industrial products, nearly half saw output contract in the January to November period, while railway cargo volume fell 11.9% for all of last year, according to official sources.

Given weaker industrial output in China and more than three years of industrial deflation, a 6% expansion for manufacturing in 2015 is questionable “no matter how the number is counted,” said Mr. Xu, who added that he believes it’s more probable that industry and construction grew at most by 2% last year and perhaps not at all. That translates into economic growth that tops out at 5.2% last year and perhaps something in the 4s, assuming the official agriculture and service sector growth figures are correct, he said. Mr. Xu said it’s unlikely that the service sector– sometimes cited as an explanation for growth rate discrepancies – did better than reported by authorities.

Read more …

Twins.

Yuan Vs. Yen: How China Figures Into Japan’s Negative Rates (WSJ)

Japan’s move to negative interest rates is the latest step in a dangerous dance between the world’s second and third largest economies. The problem is currencies. China’s moves to bring down the value of the yuan have rattled markets this year, sparking a flight from risky assets that has sent investors into safer havens like the yen. The stronger yen in turn has threatened to tip Japan’s economy back into deflation, which the central bank has struggled to vanquish. The rising yen has also put more pressure on corporate profits and helped push Japanese stocks into bear market territory last week. So when the Bank of Japan announced its plan to lower interest rates below zero for the first time Friday, it makes sense that Governor Haruhiko Kuroda named just one country among the risks facing its economy China.

Now it’s China s turn to sweat. The yen fell as much as 2.1% after the announcement, which will make Chinese exports more expensive relative to Japanese products. The two countries, and most of their neighbors, are struggling against a tide of money outflows and weak trade. While governments in the rest of Asia have far more room to stimulate their economies than Japan does, a decline in the yen could spur them to try to push down their own currencies. Were China to follow and the central bank has already allowed the yuan to fall it would ignite another round of fear, which could push up the yen and force the Bank of Japan to act again. So far, the yen’s ups and downs have left it about where it was a year ago, so the risk of a cycle of competitive devaluation is limited.

In addition, the drop in the yen would have been a bigger problem for China when the yuan was pegged to the dollar. The government’s recent switch to a basket of currencies that includes the yen means the move up won’t be as big. But it still will push the currency in the wrong direction for the slowing economy. There’s another reason China does’ t want the yen to fall. Right now, thousands of Chinese are planning their Lunar New Year’s holidays in Japan early next month, hoping to take advantage of the cheap yen. During the October Golden Week, China’s other big travel week of the year, Chinese tourists descended on Japan, spending more than $830 million on shopping, according to the state-run China Daily.

China is suffering an epic capital flight in which hundreds of billions of dollars are leaving the country. A weaker yen will send more Chinese into Tokyo’s department stores and further drain China’s currency reserves. The economic fates of China and Japan are closely connected. Until their economies get on stronger footing, moves to boost growth in one country could hurt the other and risk retaliation. As the world economy stays weak, the interaction between China and Japan could play an increasingly important role both in Asia and globally.

Read more …

Zero.

IPO Market Comes to a Standstill (WSJ)

A frigid January for initial public offerings is pointing to a hard winter for fledgling biotechnology firms and other private companies. There were no U.S. IPOs in January, the first such month since the eurozone crisis in September 2011, according to data provider Dealogic. Investors and analysts attribute the dearth to the global stock-market rout of the first two weeks of the year, which signaled a broad retreat from risk by investors. If sustained, the reversal threatens to send ripples through global financial markets. Many analysts and traders view a healthy IPO sector as a necessary precondition for a sustainable advance in the broad stock indexes, as dozens of private companies have built their plans around raising cash in the public markets.

In recent years, markets were “wide open and companies that wanted to raise capital could,” said Eddie Yoon, portfolio manager of the Fidelity Select Health Care Portfolio, with $9 billion in assets. But now some companies, both public and private, could face being shut out for an extended period, as many investors seek to reduce risk by focusing on firms with histories of steady profitability and revenue growth. Several new share offerings by already-public biotech companies have floundered this year, not only pricing at steep discounts, but also falling even further the session after pricing. So far this year, new-share offerings by biotech companies have dropped 15% from the time of the announcement of the deal to the end of trading after the sale, according to data from Dealogic. “If the market does reopen, it will be for higher quality companies,” said Mr. Yoon.

Read more …

France wants debt relief?!

Greece’s Lenders To Start Bailout Review On Monday (Reuters)

Greece’s official lenders will start a review on Monday of what progress the country has made in implementing the economic reforms agreed under its third bailout, a necessary step towards debt relief talks, a finance ministry official said on Saturday. Greece’s international lenders are the IMF and the euro zone bailout fund. The reforms that Greece has to implement in exchange for loans are also reviewed by the ECB and the European Commission. “The first phase will last a few days as there will be a break at the end of next week, after which the institutions will return to conclude the negotiations,” the official said, declining to be named. Athens is keen for a speedy completion of the review, which was expected to begin late last year, and hopes a positive outcome will help boost economic confidence and liquidity.

To secure a positive result from the review Athens needs to pass legislation on pension reforms to render its social security system viable, set up a new privatization fund and come up with measures to attain primary budget surpluses for 2016-2018. A successful conclusion of the performance review will open the way for debt relief talks. The head of the bailout fund, the European Stability Mechanism (ESM), has ruled out a haircut for Greece’s debt but extending debt maturities and deferring interest are options that could be used to make it more manageable. French Finance Minister Michel Sapin told Kathimerini debt relief talks must start soon to help restore Greece’s financial stability. “France’s view is that the sooner the first review is completed, the faster we will be able to tackle the issue of debt sustainability and this will be better for everyone – for Greece as well as the entire euro zone,” Sapin told the paper.

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Stories from NZ have been bad for a while now.

Milk Collapse Brings a 45% Pay Cut to England’s Dairy Farmers (BBG)

England’s dairy farmers will see income fall by almost half this year, evidence that the global milk crisis is far from over. Earnings will average 46,500 pounds ($66,500) per farm in England for the 2015-16 season that started in March, the Department for Environment, Food & Rural Affairs said in a report Thursday. That figure, which includes European Union aid payments, is 45 percent below the prior season and the lowest in 9 years. Dairy farmers across Europe are struggling with a collapse in prices after a global oversupply of milk was compounded by slowing demand in China and Russia’s ban on EU dairy in retaliation for sanctions.

Protests over low prices broke out in France this week as more than 100 farmers, many of them livestock breeders, blocked roads and used tractors and burning tires to stop access to the port city La Rochelle. “There’s too much milk in the world,” said Robbie Turner, head of European markets at Rice Dairy International, a risk management advisory firm in London. “There are people who are hard for cash,” and prices are likely to remain low for at least the next six months, he said. On Thursday, Fonterra, the world’s largest dairy exporter, cut its milk price forecast to a nine-year low. The Auckland-based company doesn’t expect a sharp recovery in Chinese demand any time soon.

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Luckily we’re maxed out.

‘Peak Stuff’ And The Search For Happiness (Guardian)

On Monday, Walmart will start paying a minimum of $10 an hour to its 1.4 million skilled staff in America – in conventional economists’ terms, a ludicrous and unnecessary transfer of income from capital to labour. But, facing the same retail environment as Apple and Ikea, Walmart wants to motivate its frontline staff into being more engaged and innovative. Consumers want some help in understanding and interpreting their particularities, help in answering the question of what, in a profound sense, their spending is for. When you have enough, what need is being served by having more?

Economists are not equipped to address such phenomena. Faltering growth in consumer demand in all western countries is understood wholly in traditional economic terms: the story is that consumers are indebted and uncertain, they lack confidence and want to rebuild their savings. Rightwing, anti-state economists, so influential in the Republican and Conservative parties, peddle tax cuts as the universal panacea. Like Pavlov’s dog, consumers will flock back to the shops once they are emboldened by a tax cut. Obviously, there would be some increase in spending, but far less than there used to be. More fundamental forces are holding back spending .

There is a quest for meaning, aided and abetted by the knowledge and information revolutions, that is not answered by traditionally scale-produced goods and services. Economist Tomas Sedlacek, who has won an international following for his book Economics of Good and Evil, insists that contemporary societies have become slaves to a defunct economistic view of the world. When western societies were poorer, it was reasonable for economics to focus on how to produce more stuff – that was what societies wanted. Now, the question is Aristotelian: how to live a happy life – or “humanomics”, as Sedlacek calls it. Aristotle was clear: happiness results from deploying our human intelligence to act creatively on nature. To inquire and successfully to quest for understanding is the root of happiness.

Yet most people today, says Sedlacek, work in jobs they do not much like, to buy goods they do not much value – the opposite of any idea of the good life, Aristotelian or otherwise. What we want is purpose and a sense of continual self-betterment, which is not served by buying another iPhone, wardrobe or a kitchen. Yet purpose and betterment need a social context: purpose is a shared endeavour and self-betterment is to act on the world better with others. An individualistic society such as our own makes it much harder to find others with whom to make common cause.

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Well, stop the war then.

Merkel Says Refugees Must Return Home Once War Is Over (Reuters)

German Chancellor Angela Merkel tried on Saturday to placate the increasingly vocal critics of her open-door policy for refugees by insisting that most refugees from Syria and Iraq would go home once the conflicts there had ended. Despite appearing increasingly isolated, Merkel has resisted pressure from some conservatives to cap the influx of refugees, or to close Germany’s borders. Support for her conservative bloc has slipped as concerns mount about how Germany will integrate the 1.1 million migrants who arrived last year, while crime and security are also in the spotlight after a wave of assaults on women in Cologne at New Year by men of north African and Arab appearance.

The influx has played into the hands of the right-wing Alternative for Germany (AfD), whose support is now in the double digits, and whose leader was quoted on Saturday saying that migrants entering illegally should, if necessary, be shot. Merkel said it was important to stress that most refugees had only been allowed to stay for a limited period. “We need … to say to people that this is a temporary residential status and we expect that, once there is peace in Syria again, once IS has been defeated in Iraq, that you go back to your home country with the knowledge that you have gained,” she told a regional meeting of her Christian Democratic Union (CDU) in the state of Mecklenburg-Western Pomerania.

Merkel said 70 percent of the refugees who fled to Germany from former Yugoslavia in the 1990s had returned. Horst Seehofer, leader of the Christian Social Union (CSU), the CDU’s Bavarian sister party, has threatened to take the government to court if the flow of asylum seekers is not cut. Merkel urged other European countries to offer more help “because the numbers need to be reduced even further and must not start to rise again, especially in spring”. Fabrice Leggeri, the head of the European Union’s border agency Frontex, said a U.N. estimate that up to a million migrants could try to come to Europe via the eastern Mediterranean and Western Balkans next year was realistic. “It would be a big achievement if we could keep the number … stable,” he told the magazine Der Spiegel.

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Europe doesn’t care for kids.

10,000 Refugee Children Are Missing, Says Europol (Observer)

At least 10,000 unaccompanied child refugees have disappeared after arriving in Europe, according to the EU’s criminal intelligence agency. Many are feared to have fallen into the hands of organised trafficking syndicates. In the first attempt by law enforcement agencies to quantify one of the most worrying aspects of the migrant crisis, Europol’s chief of staff told the Observer that thousands of vulnerable minors had vanished after registering with state authorities. Brian Donald said 5,000 children had disappeared in Italy alone, while another 1,000 were unaccounted for in Sweden. He warned that a sophisticated pan-European “criminal infrastructure” was now targeting refugees.

“It’s not unreasonable to say that we’re looking at 10,000-plus children. Not all of them will be criminally exploited; some might have been passed on to family members. We just don’t know where they are, what they’re doing or whom they are with.” The plight of unaccompanied child refugees has emerged as one of the most pressing issues in the migrant crisis. Last week it was announced that Britain would accept more unaccompanied minors from Syria and other conflict zones. According to Save the Children, an estimated 26,000 unaccompanied children entered Europe last year. Europol, which has a 900-strong force of intelligence analysts and police liaison officers, believes 27% of the million arrivals in Europe last year were minors.

“Whether they are registered or not, we’re talking about 270,000 children. Not all of those are unaccompanied, but we also have evidence that a large proportion might be,” said Donald, indicating that the 10,000 figure is likely to be a conservative estimate of the actual number of unaccompanied minors who have disappeared since entering Europe. In October, officials in Trelleborg, southern Sweden, revealed that some 1,000 unaccompanied refugee children who had arrived in the port town over the previous month had gone missing. On Tuesday a separate report, again from Sweden, warned that many unaccompanied refugees vanished and that there was “very little information about what happens after the disappearance”.

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But they think they can stop it.

Aegean Sea Refugee Crossings Rise 35 Fold Year-On-Year In January (Guardian)

More than 52,000 refugees and migrants crossed the eastern Mediterranean to reach Europe in the first four weeks of January, more than 35 times as many as attempted the crossing in the same period last year. The daily average number of people making the crossing is nearly equivalent to the total number for the whole month of January as recently as two years ago, according to the International Organisation for Migration. More than 250 people have died attempting to make the crossing this month, including at least 39 who drowned in the Aegean Sea on Saturday morning after their boat capsized between Turkey and Greece. Turkish coastguards rescued 75 others from the sea near the resort of Ayvacik on Saturday, according to the Anadolou news agency.

They had been trying to reach the Greek island of Lesbos. The eastern route into Europe, via Greece, has overtaken the previously popular central Mediterranean route from north Africa over the past year. Refugees have continued to use the route all winter, despite rough seas and strong winds. “An estimated 52,055 migrants and refugees have arrived in the Greek islands since the beginning of the year,” the IOM said. “This is close to the total recorded in the relatively safe month of July 2015, when warm weather and calm seas allowed 54,899 to make the journey.” Turkey, which is hosting at least 2.5 million refugees from the civil war in neighbouring Syria, has become the main launchpad for migrants fleeing war, persecution and poverty.

Ankara struck a deal with the EU in November to halt the flow of refugees, in return for €3bn (£2.3bn) in financial assistance to help improve the refugees’ conditions. This week the IOM reported that a survey of migrants and refugees arriving in Greece showed 90% were from Syria, Iraq or Afghanistan. People of those nationalities are allowed to leave Greece and enter Macedonia en route to western Europe as asylum seekers. But on Wednesday the Idomeni border crossing from Greece to Macedonia remained closed from midday to midnight. Macedonian officials blamed congestion at the border with Serbia.

Read more …

“Why is Greece guilty? Because it doesn’t let them drown?”

Greeks Worry Threatened Closure Of EU Border ‘Definition Of Dystopia’ (Guar.)

With Brussels contemplating drastic measures to stem the flow, calls are mounting to seal the Greek-Macedonian border, raising fears of hundreds of thousands being stranded in Greece, the country now perceived to be the continent’s weakest link. The prospect of migrants being trapped in a member state that financially is also Europe’s most fragile may once have seemed extreme, even absurd. Its economy ravaged by six years of internationally mandated austerity and record levels of unemployment, Greece’s coping strategies are markedly strained. But as EU policymakers seek ever more desperate ways to deal with what has become the largest mass movement of people since the second world war, it is an action plan being actively worked on by mandarins at the highest level.

Like so much else in the great existential crisis facing Europe, a proposed policy that was once seen as bizarre now looks like it could become real. Last week Athens was also given a three-month ultimatum to improve the way it processes arrivals and polices its borders – at nearly 8,700 miles the longest in Europe – or face suspension from the passport-free Schengen zone. Closure of the Greek-Macedonian frontier would effectively cut it out of that fraternity. Those who have watched Greece’s rollercoaster struggle to keep insolvency at bay are united in their conviction that the move would be catastrophic. “It would place a timebomb under the foundations of Greece,” says Aliki Mouriki at the National Centre of Social Research. “Hundreds of thousands of refugees trapped in a country that is bankrupt, that has serious administrative and organisational weaknesses, with a state that is unable to provide for their basic needs?”

The question hangs in the air while she searches for the right word. “What we would witness,” she adds, “would be the definition of dystopia.” Like the mayors who have been forced to deal with the emergency on Greece’s eastern Aegean isles, federal politicians believe Turkey is the root of the problem. “With all due respect for a country that is hosting 2 million refugees, it is Turkey that must do something to stop the organised crime, the smugglers working along its coast,” Yannis Mouzalas, the minister for migration policy, told the Observer. “These flows are not Greece’s fault even if, it is true, we have been slow to set up hotspots and screening was not always what it should have been,” he said. “It is Turkey that turns a blind eye to them coming here. It is Turkey that must stop them. Why is Greece guilty? Because it doesn’t let them drown?”

Read more …

Morals? Europe?

Europe’s Immigration Bind: Morals vs Votes (Guardian)

The dream of free movement within the EU has also spawned paranoia about the movement of people into the EU. The quid pro quo for Schengen has been the creation of a Fortress Europe, a citadel against immigration, watched over by a hi-tech surveillance system of satellites and drones and protected by fences and warships. When a journalist from Germany’s Der Spiegel magazine visited the control room of Frontex, the EU’s border agency, he observed that the language used was that of “defending Europe against an enemy”. Many of the policies enacted over the past year give a sense of a continent at war. In June, an emergency EU meeting came up with a 10-point plan that included the use of military force “to capture and destroy” the boats used to smuggle migrants.

Soon afterwards, Hungary and other east European countries began erecting razor-wire fences. Germany, Austria, France, Sweden and Denmark suspended Schengen rules and reintroduced border controls. In November, the EU struck a deal with Turkey, promising it up to $3.3bn in return for clamping down on its borders. This month, Denmark passed a law allowing it to seize valuables from asylum seekers to pay for their upkeep. Despite the sense that the crisis is unprecedented, there is nothing new in it or the incoherence of the EU’s response. People have been trying to enter the EU, and dying in the attempt, for a quarter of a century and more.

Until 1991, Spain had an open border with North Africa. Migrant workers would come to Spain for seasonal work and then return home. In 1986, the newly democratic Spain joined the EU. As part of its obligations as a EU member, it had to close its North African borders. Four years after it did, it was admitted into the Schengen group. The closing of the borders did not stop migrant workers trying to enter Spain. Instead, they took to small boats to cross the Mediterranean. On 19 May 1991, the first bodies of clandestine migrants were washed ashore. Since then, it is estimated that more than 20,000 people have perished in the Mediterranean while trying to enter Europe.

Read more …

Every day.

39 Greece-Bound Refugees Drown Off Turkish Coast (AP)

Turkey’s state-run news agency says at least 39 people, including five children, have drowned in the Aegean Sea after their Greece-bound boat capsized off the Turkish coast. Anadolu Agency says coast guards rescued 75 others from the sea Saturday near the resort of Ayvacik en route to the Greek island of Lesbos. The agency has identified the survivors as natives of Afghanistan, Syria and Myanmar. The International Organization for Migration says 218 people have died this year while trying to cross by sea from Turkey to Greece. Turkey is hosting an estimated 2.5 million refugees from Syria. In November, Turkey agreed to fight smuggling networks and stem the flow of migrants into Europe. In return, the EU has pledged €3 billion to help improve the refugees’ conditions.

Read more …

Sep 272015
 
 September 27, 2015  Posted by at 5:15 pm Finance Tagged with: , , , , , , , , ,  


Harris&Ewing The Capitol in the snow 1917

Societies in decline have no use for visionaries
– Anaïs Nin

The moment we heard that John Boehner would resign, the first thing that came to mind was: the next one will be a Greater Fool and a Bigger Liar. For all of his obvious faultlines, Boehner is human. As was evident for all to see Thursday when the Pope -Boehner’s as Catholic as JFK and Jesus Christ- came to see ‘him’ in ‘his’ Senate. Even smiled reading that the Pope had asked Boehner to pray for him.

But Boehner was really of course just a man who through time increasingly became a kind of barrier between a president and his party on the one hand, and Boehner’s own, increasingly ‘out there’, party on the other. He moved from far right to the right middle just to keep the country going. In essence, that’s little more than his job, but just doing your job can get you some nasty treatment these days in the land of the free.

So now we’ll get a refresher course in government shutdown, though there’s no guarantee that Boehner’s successor will be enough of a greater fool to cut his/her (make that his) new-found career short by actually letting it happen. At least not before December.

The government shutdown is a threat like Janet Yellen’s rate hike, one which always seems to disappear right around the next corner, a process that eats away at credibility much more than participants are willing and/or able to acknowledge. Until it’s too late.

Now that it’s clear they lost on Obamacare, Republicans demand that funding for Planned Parenthood must stop, as the women’s group is accused of ‘improperly selling tissue harvested from aborted fetuses’, something it vehemently denies. And there we’re right back to the shadow boxing multi-millionaire tragic comedy act the US Congress has been for years now.

So yeah, by all means let it shut down. Thing is, as much as Boehner was always already a walking safety hazard, there’s guys waiting in the wings who’d love to end Obama’s presidency any which way they can. The official GOP viewpoint may be that Da Donald is a greater fool, but that view isn’t shared by the entire caucus. Again, so yeah, bring it on, like the rate hike, let’s see you do it.

It’s not a little ironic that one day after the Pope holds his hand, Boehner leaves a squabble behind that involves aborted fetuses. Where I come from, no accusations of people either eating babies or selling their tissue is taken serious, ever. We call that folklore.

Meanwhile, Anarchy In The US is a distinct possibility. It’s probably a good thing all these guys still have paymasters, wouldn’t want to have them make their own decisions. More irony: Boehner brought more donations into the GOP caucus than anyone else. They’ll miss him yet.

Also meanwhile, European and US exchanges were up on Friday as if no investor ever saw a Volkswagen in their lives. Even as there’s no escaping the idea that VW’s illegal drummings go way beyond the 11 million vehicles they themselves fessed up to, and the millions more from other carmakers. Where I come from, we call this endemic fraud.

This little graphic from T&E seems to indicate that VW was the least worst of the offenders. And it will be very hard for politicians to find a carpet left big enough to sweep this under. Class action lawsuits are being prepared for investors and car owners, and politics doesn’t trump courts, at least not everywhere.

Merkel and Hollande and all of their lower level minions will have to cut their losses and offer their carmakers to the vultures, or risk getting severely burned in the process. Or is it already too late? The German Green Party claims Merkel knew of the rigged emissions tests. For now, the government is in steep denial:

German Greens Claim Merkel Government Knew Emissions Tests Were Rigged

The German Green party has claimed that the German Government, led by Chancellor Angela Merkel, knew about the software car manufacturers used to rig emissions tests in the US. The Green party has said it asked the German Transport Ministry in July about the devices used to deceive regulators and received a written response as follows, the FT reports: “The federal government is aware of [defeat devices], which have the goal of [test] cycle detection.”

The Transport Ministry denied knowing that the software was being used in new vehicles, however. The timing of the questions has raised concerns over whether the German government knew about the activities at Volkswagen stretching back to 2009. “The federal government admitted in July, to an inquiry from the Greens, that the [emissions] measurement practice had shortcomings. Nothing happened,” said Oliver Krischer, a German Green party lawmaker.

That written response the Financial Times reports on either exists or it does not. Let’s see it. Simple. If it does exist, Merkel’s in trouble. Then again, the EU knew about the defeat device at least two years ago. It’s starting to look as if everyone was involved. And you can’t fire everyone.

EU Warned On Devices At Centre Of VW Scandal Two Years Ago

EU officials had warned of the dangers of defeat devices two years before the Volkswagen emissions scandal broke, highlighting Europe’s failure to police the car industry. A 2013 report by the European Commission’s Joint Research Centre drew attention to the challenges posed by the devices, which are able to skew the results of exhaust readings. But regulators then failed to pursue the issue — despite the fact the technology had been illegal in Europe since 2007. EU officials said they had never specifically looked for such a device themselves and were not aware of any national authority that located one.

Matthias Müller was announced as VW’s new head honcho. Now there’s a greater fool if ever you saw one. Who can possibly want that gig? His predecessor Winterkorn left the top post, but to date not the one as head of Porsche. Ergo, he presides over those who lead the internal investigation at the company. And even if Winterkorn is bought off and out, VW is still as big of a hornet’s nest as you can find. The company’s corporate -and legal- structure, which includes unsavorily close ties to the governments of both Lower Saxony -which owns 20% of the company, in (highly) preferred stock- and federal Germany, virtually guarantees it.

Nor does it stop there. Both the German and British governments now stand accused of perverting EU law on emissions. The Wall Street Journal asks how much the EU itself knew. Easy answer: plenty. Inevitable. Key words: spin doctors, damage control.

This morning’s Bild am Sonntag, which claims to be in the possession of an ‘explosive document’, reports first that a October 7 deadline has been handed VW by Berlin to ‘fix’ its problems, and second that engineering giant Bosch, which provided the -initial?!- “defeat device” software, warned VW as long as 8 years ago, in 2007, that the software was for internal testing purposes only. VW‘s own technicians “warned about illegal emissions practices” in 2011, the Frankfurter Allgemeine Sonntagszeitung cites an internal report as saying.

And that’s just the beginning. Or rather, the beginning may have been much earlier. Bloomberg writes, in an article called “Forty Years Of Greenwashing” that “On 23 July 1973, the EPA accused [Volkswagen] of installing defeat devices in cars it wanted to sell in the 1974 model year.” Great, now we have to wonder what Gerald Ford knew? Dick Nixon?

In perhaps an ill-timed effort to divert attention away from her car industry, Merkel dreams of more global power:

Germany Battles Past Ghosts as Merkel Urges Greater Global Role

Europe’s dominant country is stepping out from its own shadow. Seventy years after Germany’s defeat at the end of World War II, Chancellor Angela Merkel’s government is signaling a willingness to assume a bigger role in tackling the world’s crises without fear of offending allies like the U.S. Spurred into more international action by the refugee crisis, Merkel on Wednesday prodded Europe to adopt a “more active foreign policy” with greater efforts to end the civil war in Syria, the source of millions fleeing to safety. As well as enlisting the help of Russia, Turkey and Iran, Merkel said that will mean dialogue with Bashar al-Assad, making her the first major western leader to urge talks with the Syrian president.

Germany’s position as Europe’s biggest economy allowed Merkel and her finance minister, Wolfgang Schaeuble, to assume a leading role during the euro-area debt crisis centered on Greece, but the change in focus to beyond Europe’s borders is very much political. After decades of relying on industrial prowess – now under international scrutiny as a result of the Volkswagen scandal – globalization and the necessity to keep Europe relevant are opening up options for Merkel to make Germany a less reluctant hegemon.

Syria has spurred “a rethink in German foreign policy,” Magdalena Kirchner at the German Council on Foreign Relations in Berlin, said. “As the refugee crisis developed, the view took hold that this conflict can no longer be fenced off or ignored. With her stance on the crisis, Merkel may be prodding other European leaders toward a bigger international engagement.”

And Angela’s Germany tells the ECB to take a hike and grow a pair while they’re at it. For a country that spent the best part of the year telling Greece to stick to the law and the plan or else, that’s quite something.

ECB Faces Defiance on Bank Oversight as Germany Hoards Power

The ECB faces increasing defiance from euro-area governments reluctant to cede control over their lenders, highlighted by a German bill that chips away at the ECB’s supervisory powers. The Bundestag, the lower house of parliament, votes Thursday on an amendment to Germany’s banking act that would allow the Finance Ministry in Berlin to issue rules on banks’ recovery plans, risk management and internal decisions under a bill implementing European Union rules for winding down failing banks. The ECB, which assumed supervisory powers over euro-area banks last November, is considering complaining at the European Commission, asking the EU’s executive arm to take Germany to court over the legislation.

As for Angela and the refugee issue, no changes any faster than a frozen molasses flow. Germany announced it will spend €4 billion on refugees already in the country, but votes to stop who’s still coming. As if that’s a serious option. They’re going to do it with gunboats, no less. Agianst overloaded dinghies.

EU To Use Warships To Curb Human Traffickers

The EU will use warships to catch and arrest human traffickers in international waters as part of a military operation aimed at curbing the flow of refugees into Europe, the bloc’s foreign affairs chief has said. “The political decision has been taken, the assets are ready,” Federica Mogherini said on Thursday at the headquarters of the EU’s military operation in Rome. The first phase of the EU operation was launched in late June. It included reconnaissance, surveillance and intelligence gathering, and involved speaking to refugees rescued at sea and compiling data on trafficker networks. The operation currently involves four ships – including an Italian aircraft carrier – and four planes, as well as 1,318 staff from 22 European countries.

Beginning on October 7, the new phase will allow for the seizure of vessels and arrests of traffickers in international waters, as well as the deployment of European warships on the condition that they do not enter Libyan waters. “We will be able to board, search, seize vessels in international waters, [and] suspected smugglers and traffickers apprehended will be transferred to the Italian judicial authorities,” Mogherini said. “We have now a complete picture of how, when and where the smugglers’ organisations and networks are operating so we are ready to actively dismantle them,” she said.

Those 1,318 staff could be used to help and rescue refugees, who will keep coming. Another 17 drowned in the Aegean Sea this Sunday morning. That should be the no. 1 priority. Instead, Europe’s policy of death continues unabated. France started bombing Syria -again- and Putin can and will no longer be ignored when it comes to his sole Middle East stronghold. We’ve created a god-awful mess, and not even god’s alleged man-on-the-earth, the underwhelming Pope Francis, does more than stammer a few hardly audible scripted lines about it.

It’s all about power and money, and none of it is about people. In other ‘news’, China securitizes its markets in a pretty standard desperate greater fools’ last move. As I said earlier, Beijing’s Rocking the Ponzi.

China Becomes Asia’s Biggest Securitization Market

China’s fledging securitization market is soaring, as Beijing looks for new ways to ease lending to firms amid the country’s slowest period of economic growth in more than two decades. In the past few months, Chinese officials have laid out new rules to expand and quicken the process for car makers and other lenders to issue debt by bundling together pools of underlying loans. Issuance of asset-backed securities in the world’s second largest economy rose by a quarter in the first eight months of 2015—to $26.3 billion from $20.8 billion in the same period last year, according to data publisher Dealogic. Though the Chinese securitization market took flight just last year, it has already become Asia’s biggest, outpacing other, more developed markets like South Korea and Japan.

China’s new economic reality, no matter what Xi tells Obama, was revealed by China Daily. Imagine a company in the US, or an EU country, announcing 100,000 lay-offs in one go. For China, it’s the first of many, though not all may be publicly announced.

Chinese Mining Group Longmay To Cut 100,000 Coal Jobs (China Daily)

The largest coal mining group in Northeast China is cutting 100,000 jobs within the next three months to reduce its losses – one of the biggest mass layoffs in recent years. Heilongjiang Longmay Mining Holding Group Co Ltd, which has a 240,000 workforce, said a special center would be created to help those losing their jobs to either relocate or start their own businesses. Chairman of the group Wang Zhikui said the job losses were a way of helping the company “stop bleeding”. It also plans to sell its non-coal related businesses to help pay off its debts, said Wang.

In Japan, desperate fool Shinzo Abe moves on to Abenomics 2.0 with three entirely fresh but as yet unnamed new “arrows”. Here’s thinking Japan doesn’t need Abenomics 2.0, it needs Abe 2.0. Or tomorrow will be even worse than today.

Japan’s Abe Airs Abenomics 2.0 Plan For $5 Trillion Economy

Japan’s prime minister Shinzo Abe, fresh from a bruising battle over unpopular military legislation, announced Thursday an updated plan for reviving the world’s third-largest economy, setting a GDP target of 600 trillion yen ($5 trillion). Abe took office in late 2012 promising to end deflation and rev up growth through strong public spending, lavish monetary easing and sweeping reforms to help make the economy more productive and competitive.

So far, those “three arrows” of his “Abenomics” plan have fallen short of their targets though share prices and corporate profits have soared. “Tomorrow will definitely be better than today!” Abe declared in a news conference on national television. “From today Abenomics is entering a new stage. Japan will become a society in which all can participate actively.”

Participate actively in the downfall of both Abe and the nation, that is.

As for you yourself, unless you stop clinging to the silly notion of an economic recovery -let alone perpetual growth-, you too are a greater fool, the quintessential one. And until you do, you’re a bigger liar too. You lie to yourself. Just so others can lie to you too.

What is happening in today’s world is a total downfall, both economic and moral, and the two are closely intertwined. What’s more, though we’re blind to it, as Anaïs Nin said, “Societies in decline have no use for visionaries.” Our societies therefore end up with liars only. Nobody else gets a shot at the title. There’s no use for anything but lies.

All leaders, as we can see these days wherever we look, talk the talk but don’t walk the walk. Every single one of them schemes and lies and hides their acts from public scrutiny. Political leaders, corporate leaders, the lot. This behavior is so ubiquitous we’ve come to see it as inevitable, even normal.

Whether it’s the economy, climate, the planet, warfare, your future obligations, your pensions, the future of your children, nobody in power tells you the truth. Human life is fast losing the value we would like to tell ourselves we assign to it. We don’t, do we? Children drown in the Mediterranean every day, and we let them drown, it’s not just our leaders who do.

Children also get shot to bits in various theaters of war (or rather, invasion) in faraway countries that our leaders involve us in, our tax dollars pay for, and our media don’t show. What the European refugee crisis shows us is that there are no faraway countries anymore, or theaters of war. Our own technological advances have taken care of that. They’re on our doorstep. And sending in the military is only going to make it worse.

Our technological advances haven’t come with moral advances, quite the contrary, our morals turn out to be a thin layer of mere cheap veneer. What advances we’re making are the last death rattle of a society in decline, and a dying civilization. All we have left to look forward to from here on in is cats in a sack. And we owe that to ourselves.

Aug 272015
 
 August 27, 2015  Posted by at 1:34 pm Finance Tagged with: , , , , , , , , ,  


Dorothea Lange Arkansas flood refugee family near Memphis, Texas 1937

This is a story I’ve been wanting to write for a while now, at least two full weeks, but haven’t gotten around to because I have my dying mother to attend to. Something I can to an extent approach from a rational point of view, because she has expressed her explicit will to die. But it will of course never be easy, if only because I’ve been close to her all my life even in the 20-odd years I lived thousands of miles away. It’s a thing of the heart.

And so must be, at some moment or another, my dealing with what she goes through, and what I will go through when she finally gets her wish. A wish I would have thought would be reasonably easy to fulfill in a country as supposedly advanced as Holland, but that’s not true. People have to suffer more, long after they’ve signaled they’ve had enough, just to satisfy someone or another’s idea of ethics who has little to no involvement in the situation. Unless they’ve been through endless series of conversations with total strangers who will then decide when it’s time.

The person herself doesn’t have the right to make that decision. Now that I’m witnessing the process in progress, I would recommend everyone buy that pill or that gun well in advance, lest they get subjected to the same kind of self-serving morality nonsense themselves. We may not have the legal right to decide about our own lives, but what law is going to stop us from taking that decision regardless? The craziest expression of this mindless attitude is probably that in countless nations and cultures, suicide is still a punishable offence. My mother is not the suicidal kind; she just wants dignity, and is denied it.

But that’s not the story I wanted to write.

The way I write is that I sit down and let fly, most often inspired by things I’ve read recently. I make some notes, site down and often don’t use even half of those notes. In this case, I’ve taken lots of notes through the weeks, and now don’t know where to start anymore, let alone finish. Nicole (Foss) is a whole different writer: she can do the notes thing, and work on an article, which often turns out to be quite lengthy, for days if not weeks. I guess I just don’t have that kind of attention span. But you know, because we’re so different we work so well together. Because our styles may vary greatly, but we still have the same views, we just express them in different ways.

But that’s not the story I wanted to write either.

I want to say something about the issue of the refugees -never ever again migrants- that are swamping Europe. So much has been said about them, and so much has happened since I made my first notes, but not a soul has put their finger on the sore spot, and the real story. At least not that I’ve seen.

That real story is the painfully woefully inadequate -and I’m being painfully polite here- failure of Brussels and Berlin and Paris in responding to what’s been unfolding. And don’t get me started about London; there’s nothing coming from Britain these days that’s even worth talking about. When you dare talk about a ‘swarm of migrants’, you’re no longer part of the conversation.

And it’s not as if what Europe has perpetrated upon the Greek economy, and the Greek people who depend on it, isn’t enough. It is more than enough. Only, nobody seems to be willing to understand this, to let it sink in to its fullest. But that’s still kind of alright; financial policies are not the EUs biggest failure.

Even if even Varoufakis insists on being part of the EU -albeit a reformed one-. You can’t reform the EU. It’s allergic to any reform that would take even just a few of its powers away. That is embedded in its model. Varoufakis doesn’t sufficiently get this: you can’t any longer just change a few puppets in Brussels. Its alleged democracy is no longer anything but thin and peeling veneer.

It’s like the old Groucho joke, that he wouldn’t want to be part on any club that would have him as a member. It’s exactly that, actually. If you want to survive in Europe, let alone with dignity and values, it cannot be done inside the EU. And the refugee crisis tells us why, even more than the Greek crisis has.

What Brussels lacks most of all is morals, decency and compassion. It is a bureaucracy that has no human values. And this is expressed, in a painful and deadly way, not only in the streets of Athens, though it’s plenty glaringly clear there too, but even more in how the so-called Union “deals with” (that is, it doesn’t) the Mediterranean refugee issue.

We can take a philosophical approach to this, which can be interesting, though it doesn’t change a thing. We can for instance theorize about how a country, a society, a culture, that is hundreds or thousands of years old, and has gone through numerous natural and man-made disasters in its history, like so many in Europe, will have a response formulated for the next batch of mayhem, and on how to deal with those who are the victims of said mayhem.

That is what we see in how Italy and Greece have been trying to deal with the flood of refugees sailing off from Lybia and Turkey towards their shores. Both countries – or at least substantial segments of them – have gone out of their way to save refugees. Then late last year the EU -ostensibly- took over. But the EU has done next to nothing. It has paid lip service only. Which has cost thousands of human lives this year alone. And still nothing happens.

Now, now, some of them are waking up. The EU agency that is supposed to deal with it, Frontex, has announced it’s going to step up efforts to halt refugees from entering Europe. Just like it did when it took over from Italy and Greece, and the main idea was to send in the military to blow up the boats of the ugly and evil people smugglers.

Hungary is building a wall. Macedonia fired tear gas and stun grenades. The Czechs have said they’re going to send in the army. Police dogs and batons have become a common sight wherever the refugees are. Who are forced to walk a thousand miles or more, children and women and everyone. It’s a picture of disgrace. And the disgrace belongs to all of us.

EC head Juncker, after breaking a months long silence on the topic, declared this week that there’s no need for an Immigration Summit. All EU countries need to do is comply with existing regulations. Which, if I may remind you, were ‘agreed’ upon in a time when there was no such thing as the present influx of people.

What Europe should do, or rather should have done, because I guarantee you it’s too late now, is send as many people as needed to make sure people would stop drowning. To make sure the media would stop using the term ‘migrants’. To show Europe cares, and it alleged leaders first of all. To make sure there would be space and provisions for all who undertook the perilous journey, women, children, men, every single one.

Europe instead has only tried to ignore the issue, hoping it would go away by itself. This has cost at least 17,000 lives so far. And they know it. Here is a picture of a 100-meter list of 17,306 migrants who have died attempting to reach Europe, a list which was recently unveiled at the EU Parliament:

They know, and they’ve known for a long time. But still the UN said this week that Greece should do more. Greece? And Juncker says a summit is not needed. Juncker is supposed to be one of the main leaders of Europe. If we didn’t already know before, we now know for sure he’s no leader. Merkel? Haven’t seen her until this week when she said the situation is unworthy of Europe. But if anything, it’s unworthy of Merkel. She’s supposed to be a leader in Europe, and she’s very obviously not.

There’s a huge amount of people in Brussels and various European capitals who are posing as ‘leaders’, and all of them have fallen way short. All of them, Merkel, first, need to shut up and act now. Not tell other nations, or her own co-Germans, that they should be ashamed. Merkel should be ashamed of herself first. And we know that there are elections coming up, but we’re talking about human lives here, for sweet Jesus’s sake. What’s wrong with you, Angela, and all those like you? What part of you guys is even human anymore? Is only your ego left?

The EU, unlike Greece and Italy, has no history, no society, and above all no culture. The way it reacts to the refugee issue tells its entire empty story. All of it. Brussels doesn’t do anything at all in the face of thousands of people drowning. It waits for Greece to deal with the problem, which is obviously far too great for the Greeks to solve by themselves. And besides, the EU a year ago insisted on taking over rescue operations from Rome and Athens. This has brought about a strange and eery and deadly kind of Mexican stand-off.

The EU has already failed, dramatically and irreparably, in this regard. The only help refugees get is from Italy, Greece and private parties. It’s so bad that if Greece would take “full care” of the refugees entering the country -and that’s assuming it could-, there’d be even much less hope of Brussels ever lifting a finger.

In this fashion, the EU doesn’t just leave the refugees to their fate, it uses them as bait, as hostages, in its fight over financial and political power with Alexis Tsipras and the Syriza government. And though of course multiple voices try to lay the blame on Tsipras, that’s not where it belongs. Even if he could, he couldn’t. The only solution is for Greece to get out of the EU(ro) and restore dignity and humanity within its own borders.

For make no mistake, if you elect to remain part of the EU, and you let Juncker and Merkel speak in your name, then the blood of all those needlessly lost lives is also on your hands. That goes for every European citizen as much as it goes for the hapless heartless leaders they have elected.

For one thing, I can’t for the life of me understand why there are not thousands of young Dutch and German and British and French people, organized and all, in Athens, and on the Greek islands. While there are plenty of them there to get a bloody suntan on their “well-deserved vacation” while people are perishing within eyesight, and complain about their holidays being spoiled. Not all of them, I know, but c’mon, get a life! There are people dying every single day, and just because your so-called leaders let them drown doesn’t mean you should too.

Do you even know what “a life” is anymore, either yours or that of someone else? Have you ever known? A life means caring about other people. A life is not trying to make sure your own ass can sit as pretty as it can.

As for finding a solution to the refugee issue, Europe has done nothing to find one. The EU still wants the problem to just go away, and it wants the refugees to just go away. But it won’t and they won’t.

Yes, we have a mass migration on our hands. And these are invariably hard to deal with. But our first priority should always be to approach the people involved with decency and compassion. And that is not happening. We are approaching them with the opposite of decency. With stun grenades and police dogs. And with misleading terminology such as ‘migrants’.

The EU doesn’t seem to have any idea what’s causing the wave of refugees entering ‘its’ territory. When the refugees themselves state “we’re here because you destroyed our countries”, Brussels will simply say that is not true. That kind of admission is way beyond the consciousness of the ‘leadership’. But it’s a denial that won’t get them anywhere.

Meanwhile, this issue, like so many others, is being used as a reason to plea for more EU:

Summer Crisis Tests Europe’s New Nationalisms

Dimitris Avramopoulos, the EU home affairs commissioner, argued last week [that] the very reach of the migration crisis shows the limits of national solutions. That, he said, puts pressure on governments to agree in Brussels to collective measures – even, he stressed, when they are not popular.

It’s an empty hollow plea. Why agree to give up more sovereignty if Brussels only uses its growing powers to do nothing? Europeans who give in to this kind of thing give up much more than sovereignty; they give up their decency and human values too.

The refugee issue can and will not be solved by the EU, or inside the EU apparatus, at least not in the way it should. Nor will the debt issue for which Greece was merely an ‘early contestant’. The EU structure does not allow for it. Nor does it allow for meaningful change to that structure. It would be good if people start to realize that, before the unholy Union brings more disgrace and misery and death upon its own citizens and on others.

However this is resolved and wherever the refugees end up living, we, all of us, have the obligation to treat them with decency and human kindness in the meantime. We are not.

Jun 262015
 
 June 26, 2015  Posted by at 7:38 am Finance Tagged with: , , , , , ,  


NPC O Street Market, Washington DC 1925

Perhaps I should apologize for writing about Greece all the time. Thing is, not only have I just arrived in Athens last night (and been duly showered in ouzo), but Greece is the proverbial early harbinger of everything that’s wrong with the world (not to worry, I know that’s a hyperbole), and of everything that could be done about it.

That places a responsibility on the shoulders of Syriza leader Alexis Tsipras and his team that maybe they don’t want, and for all I know don’t deserve either. But they’re all we have, and besides, they’re all their own people have. In that sense, this is not about everything that’s wrong with the world, other than that’s the same as everything that’s wrong with Greece.

I was struck last night, talking to people here in Athens, by how much their appreciation of Tsipras, his overall composure and the way he handles the Troika talks, has increased over the past five months. They were doubtful about him before the Syriza election win; they no longer are.

Still, the negotiations are nice and all, but they’re not going anywhere, and they never will. The Troika side of the table is interested in one thing only: to humiliate Athens and force it into ultimate submission, along the lines of those photographs we’ve come to know of Abu Graibh.

Yanis Varoufakis labeled the Troika policies vis-a-vis Greece ‘fiscal waterboarding’ when he started out as finance minister, and here’s thinking he should have stuck with that image in a much more persistent and a much louder fashion.

Yes, we know, Syriza doesn’t have the mandate to take the country out of the eurozone. A daily dose of fear tactics in the domestic and international media still have Greeks, even Syriza voters, scared stiff about going it alone.

It’s time for Tsipras to turn to his people, on national TV, and say look, whatever we can discuss with the Troika, and whatever compromise we may be able to reach, there is no option on or off the table that would allow for you, the people of Greece, to not be debt slaves for the rest of your lives.

The European Union is merely a crude modern version of a feudal society (but without the debt jubilee older versions had), that’s all the morals that Brussels and Berlin can muster. And, Tsipras should say, if that is what you want, if you want to be slaves instead of a free people, tell me so. I will draw my conclusions from that.

But this is getting painful. We have an entire team of Greece’s brightest drawing up plan after plan, most of which are never even discussed by the Troika. It all comes down to you, the people, and we, your representatives, being rudely insulted every minute of the day by people whose only interest is their own personal careers and agendas.

I, Alexis Tsipras, think I deserve better than that, and much more importantly, I think my people deserve better than that. But in these negotiations, no matter how long they last, we will never get what we deserve. The Troika seeks to humiliate us, and force us on our knees with our pants down our ankles and a hood over our faces..

This will take courage on the part of Tsipras; it may well end his political career. But such courage is exactly what the Greek people need to see. They need a leader who is willing to put it all on the line, or else why would they themselves?

The threat of Armageddon following an exit from the euro is an abstract and unknown phenomenon akin to various bogeymen used to keep children in check, akin to the threat of drowning that makes waterboarding such an inhumane experience.

But whatever may or will happen, there is nothing that says or guarantees that a euro-less Greece will be worse off than it is now. Not even from a purely financial point of view (other than for an initial short period of time).

What the Greeks are sure to gain, though, is their independence, their dignity, their pride. Why on earth would they, once they understand the predicament, vote to stay on and pay their odious debts and kowtow to the five families in Brussels and Berlin for the rest of their lives?

It makes no sense at all, and it makes no sense for Tsipras and his team to keep on negotiating for a deal that will never do anything but humiliate them, and shackle the people who voted for them. There is no other possible option on the table, and there won’t be in the future.

As I was writing this in the early Athens morning, I saw an article by my dear friend Steve Keen come in, and I’m very pleased to see Steve think along the same lines I do, at the same time.

Bureaucrazies Versus Democracy

This belief that economists know better than politicians how to run an economy was enshrined in the Maastricht Treaty itself, which limited government deficits to 3% of GDP and government debt to 60% of GDP. It was a set of rules designed to shackle political freedom, so that the economy could flourish under the incorruptible leadership of experts.

Some experts. Firstly they designed a system which would only work if capitalism never had crises. Secondly, when a crisis hit, rather than backpedalling on their flawed rules, they doubled up on them. Then, when the people had the temerity to elect a government which opposed their agenda… Well it’s obvious, isn’t it? The people must be overthrown.

I know from personal conversations with Varoufakis and his advisors, as well as from the public record, that Syriza is willing to do almost anything to stay within the Euro. As Yanis put it at the INET conference in Paris in April, the Euro is a bit like the Hotel California: you should never check into it in the first place, but if you do, you can never leave.

But the conditions the IMF, EU and ECB are insisting upon here are so extreme, and their behaviour so counter to the very concept of democracy, that maybe the Greeks would do better to show them what a democratic government can do. Maybe they should leave the Euro, and default on all their debts—especially those to the Troika. The financial stimulus from throwing off the yoke of debt may counterbalance the initial chaos from re-instituting a national currency in a seriously damaged society.

It may also teach the bureaucrazies -and no, that is not a misprint- a lesson about the limits of bureaucratic power.

You know, it’s true that maybe it’s too much for outsiders such as Steve Keen and myself to ask of Alexis Tsipras, and the people of Greece, to jump into a big unknown. But it’s also too much to bear to watch the inane piece of theater being played out by quasi elected B movie protagonists.

And no, none of us get a free pass on this one. Your voice is long overdue. Because no matter where you are or who you are, whether you’re American or European, it’s still your government, acting in your name, that supports and magnifies the craziness unloaded upon the cradle of democracy.

All the Greek people know until now is that Europe and the IMF are attempting to strangle them. Still, so many among us don’t agree with that at all. Thing is, it’s time to let that be known. To the people of Greece, and to our own ‘leaders’ who if we don’t get vocal will continue to do as they please. Just because the people you’ve elected don’t have any morals doesn’t mean you don’t have to either.

I shouldn’t forget of course: you can start showing your support for Greece and justice right now by donating to the AE for Athens fund, just go to the Paypal widget, top of the left side bar. Make sure you end the amount you donate with $.99, so I know it’s for Greece. I’ll be seeking out foodbanks and clinics momentarilly.

Apr 212015
 
 April 21, 2015  Posted by at 6:50 am Finance Tagged with: , , , , , , , ,  


Alfred Palmer Women as engine mechanics, Douglas Aircraft, Long Beach, CA 1942

That Europe let almost 1000 people die in the Mediterranean in one night shouldn’t be a surprise to anyone, at least not to those who are still occasionally awake. The Club Med migrant crisis has been going on for a long time, and the EU’s only reaction to it has been to slash its budget and operations in the area, not to expand them.

So when the New York Times opens with “European leaders were confronted on Monday with a humanitarian crisis in the Mediterranean..”, they’re a mile and a half less than honest. Brussels has known what was going on for years, and decided to do less than nothing.

The onus was put on Italy, Malta, Greece and a handful of private compassionate activists to handle the situation, as if it was some sort of local, or even tourist, issue, while Europe’s finest went back to festive gala openings of their €1 billion+ ‘official’ edifices, and back to forcing more austerity on member nations. Somebody has to pay for those buildings.

The EU took over rescue operations from Italy late last year and promptly cut the budget by two-thirds. Saving migrant lives was deemed just too expensive. You don’t survive in European politics if you don’t get your priorities straight.

On March 8, I wrote ‘Europe, The Morally Bankrupt Union’, and things have only deteriorated from there. If the international press, and various world leaders, wouldn’t have called them out over the weekend, the Brussels class would still not do a thing about the migrant drama, and would still feel comfortable hiding behind the factoid that most migrants drown outside European waters.

In their meeting on Monday, a bunch of EU interior and foreign ministers once again didn’t reach any meaningful conclusions; it’ll be up to presidents and prime ministers to do this on Thursday. One might almost hope for another huge tragedy before that date, just so the cynical hypocrisy that rules Europe would be exposed once again for all to see. From my March 8 piece:

To its south, the EU faces perhaps its most shameful -or should that be ‘shameless’? – problem, because it doesn’t do anything about it: the thousands of migrants who try to cross the Mediterranean to get to Europe but far too often perish in the process. The Italians spend themselves poor, trying to save as many migrants as they can (170,000 last year!), and there are private citizens – Americans even – pouring in millions of dollars, but the EU itself has zero comprehensive policy as people keep dying on its doorstep all the time. The official line out of Brussels is that the EU polices only the European coastline, but the drownings mostly take place off the Lybian coast. At least Italy and others do sail there to alleviate the human misery.

And now the problem threatens to expand into a whole new and additional dimension, with Muslim extremists like ISIS set to travel alongside the migrants to gain entry into Europe with the aim of launching terror attacks. Having turned a blind eye to the issue for years, Europe will now find itself woefully unprepared for this new development. Still, expect more bluster and brute force where there was never any reason or need for it. That the EU’s MO today.

And whaddaya know: brute force it is.

EU To Launch Military Operations Against Migrant-Smugglers In Libya

The EU is to launch military operations against the networks of smugglers in Libya deemed culpable of sending thousands of people to their deaths in the Mediterranean. An emergency meeting of EU interior and foreign ministers in Luxembourg on Monday, held in response to the reported deaths of several hundred migrants in a packed fishing trawler off the Libyan coast at the weekend, also decided to bolster maritime patrols in the Mediterranean and give their modest naval mission a broader search-and-rescue mandate for saving lives. A summit of EU leaders is to take place in Brussels on Thursday to hammer out the details of the measures hurriedly agreed on Monday. [..]

The meeting “identified some actions” aimed at combatting the trafficking gangs mainly in Libya, such as “destroying ships”, Mogherini said. Dimitris Avramopoulos, the European commissioner for migration issues, said the operation would be “civil-military” modelled on previous military action in the Horn of Africa to combat Somali piracy. The military action would require a UN mandate. No detail was supplied on the scale and range of the proposed operation, nor of who would take part in it. But European leaders from David Cameron to Angela Merkel and Matteo Renzi, the Italian prime minister, were emphatic on Monday in singling out the fight against the migrant traffickers as the top priority in the attempt to rein in a crisis that is spiralling out of control.

That not everyone on this planet has completely lost their sense of moral values doesn’t count for much if those who have none left are time and again ‘elected’ to the highest posts. But still:

[..] Save the Children accused the EU of dithering as children drowned, after they failed to agree immediate action to set up a European search and rescue operation in the Mediterranean. Save the Children CEO Justin Forsyth said: “What we needed from EU foreign ministers today was life-saving action, but they dithered. The emergency summit on Thursday is now a matter of life and death. “With each day we delay we lose more innocent lives and Europe slips further into an immoral abyss. Right now, people desperately seeking a better life are drowning in politics. We have to restart the rescue – and now.”

That is very true. But drowning in politics is precisely what the EU elite, as well as Cameron, Merkel and Renzi have made a career of. They would like nothing better than to drown everyone around them in it too, and they certainly would feel no qualm about a few nameless and faceless poor sods their voters may not have enough sympathy for to give them a slice of moldy bread.

Ironic, since, as Patrick Boyle rightly remarks today: “We fear the arrival of immigrants that we have drawn here with the wealth we stole from them.” But that may never be recognized.

Instead of making sanity heard, Europe’s leaders grow more wary by the day of the potential electoral losses that may result from the growing xenophobia spreading around the continent. Politics is a calculated game ruled exclusively by the lowest common denominator. Not by morals.

But of course, they still know how to talk the talk, as the BBC reports :

EU foreign policy chief Federica Mogherini said the 10-point package set out at talks in Luxembourg was a “strong reaction from the EU to the tragedies” and “shows a new sense of urgency and political will”. “We are developing a truly European sense of solidarity in fighting human trafficking – finally so.” [..]

That Europe has the guts to say such things says a lot about who their audience is: the vast majority are people who are not paying any attention, who don’t give a damn, or who think the fewer Africans make it to Europe, the better.

In a functioning democratic system, you would say throw out those who failed, let them as it used to be called “face the consequences of their actions”, but Brussels has no such system. Mogherini should obviously be put out by the curb, since the final political responsibility for the tragedy is hers, but she won’t go.

And there is certainly no mechanism for throwing out the leaders of the various member governments. Other, perhaps, than elections that are mostly years away, by which time their disgraceful behavior will have either long been forgotten or overshadowed by ‘more important’ issues like road building, gasoline taxes and pension cuts.

Maltese Prime Minister Joseph Muscat said Sunday’s disaster off Libya was “a game changer”, adding: “If Europe doesn’t work together history will judge it very badly.”

No worries, Mr. Muscat, history will judge the EU very badly regardless of what it does from here on in, and for many reasons. Homicidal negligence is but one of many.

Meanwhile Martin Schulz, apparently not the fastest cookie in the jar, volunteers to indict himself:

Martin Schulz, the president of the European Parliament, expressed dismay at what he characterized as European apathy over the migration crisis. “How many more people will have to drown until we finally act in Europe?” he asked in a statement. “How many times more do we want to express our dismay, only to then move on to our daily routine?”

Indeed, Mr. Schulz, how many more times will you? I’m thinking, if given a chance, you will do just that a lot more times. And I don’t hear anyone calling for your resignation, so you would seem to be off the hook too. If, on the other hand, you’d like to claim that even the president of the European Parliament doesn’t have the power to save human lives, you have us wondering why such a parliament exists, and has a president, in the first place.

You either have the power or you don’t. And if you do have the power, you have the responsibility too. That’s how politics used to be structured, and for good reason. If and when people die because of what you either do or neglect to do, you “face the consequences”. The fact that such a mechanism doesn’t even begin to exist in the EU speaks volumes about how poorly and badly it was constructed in the first place.

And neither does the EU just fail spectacularly in the waters of the Mediterranean. It fails as badly in Greece, where it keeps pushing demands for more austerity on people going hungry, and in Ukraine, where the EU is an accomplice, through a ‘government’ it supports, to the loss of what German intelligence claims are as many as 50,000 human lives.

The body count is rising, and Brussels itself will never call it quits. It really is high time to halt this unholy union.

Mar 082015
 
 March 8, 2015  Posted by at 2:32 am Finance Tagged with: , , , , , , , ,  


Christopher Helin Kissel military Highway Scout Kar at Multnomah Falls, Oregon 1918

The European Union is busy accomplishing something truly extraordinary: it is fast becoming such a spectacular failure that people don’t even recognize it as one. People have no idea, they just think: this can’t possibly be true, and they continue with their day. They should think again. Because the Grand European Failure is bound to lead to real life consequences soon, and they’ll be devastating. The union that was supposed to put an end to all fighting across the continent, is about to be the fuse that sets off a range of battles.

To its east, the EU is involved in a braindead attempt at further expansion – it has only one idea when it comes to size: bigger is always better -, an attempt that is proving to be such a disaster that heads will roll in the Brussels corridors no matter what. Europe has joined the US and NATO very enthusiastically in creating not just a failed state, but a veritable imitation of Hiroshima, in Ukraine, right on its own borders. The consequences of this will haunt the EU (or if it doesn’t last, which is highly plausible, its former members) not just for weeks or months or years, but for many decades.

The carefully re-crafted relationship with Russia, which took 25 years to build, was destroyed again in hardly over a year, something for which Angela Merkel deserves so much blame it may well end up being her main political legacy. Vladimir Putin, and Russia as a nation, will not easily forget the humiliation the west has thrown at them, the accusations, the innuendo, the attempts to draw them into a war they never wanted and in which they see no advantage for any party involved.

That US warmongers would try and set this up, is something Moscow has long known and expected; that Merkel would stand side by side with the likes of John McCain and Victoria Nuland is seen as a deep if not ultimate betrayal between neighbors and friends. Russia will present Germany with the bill when it feels the time is right. Obviously, all other EU countries that have behaved in the insane ways they have over the past year will receive that same bill, or worse.

To be sure, this week we’ve seen the first protest voices from Germany regarding NATO’s vacuous attempts to draw Russia into the battlefields of Ukraine. But those voices are years too late. They can’t undo the damage already done. They may keep American weapons from reaching Kiev – and even that’s a big maybe -, but they can’t bring back either the lives of the victims, the Ukrainian economy or the trust lost between east and west.

To its south, the EU faces perhaps its most shameful -or should that be ‘shameless’? – problem, because it doesn’t do anything about it: the thousands of migrants who try to cross the Mediterranean to get to Europe but far too often perish in the process.

The Italians spend themselves poor, trying to save as many migrants as they can (170,000 last year!), and there are private citizens – Americans even – pouring in millions of dollars, but the EU itself has zero comprehensive policy as people keep dying on its doorstep all the time. The official line out of Brussels is that the EU polices only the European coastline, but the drownings mostly take place off the Lybian coast. At least Italy and others do sail there to alleviate the human misery.

And now the problem threatens to expand into a whole new and additional dimension, with Muslim extremists like ISIS set to travel alongside the migrants to gain entry into Europe with the aim of launching terror attacks. Having turned a blind eye to the issue for years, Europe will now find itself woefully unprepared for this new development. Still, expect more bluster and brute force where there was never any reason or need for it. That the EU’s MO today.

It’s not just in the south either that migrant problems are rampant: the Ukraine is a hotbed migrant route that Europe has lost control over for obvious reasons, and there have for example been thousands of African refugees camping out in the French port of Calais for what feels like forever, desperate to make it to Britain (I know, God knows why..).

To its west, the EU has Britain, which by the time it gets to vote on Europe may well have its belly so full of Brussels that no scare campaign helps anymore. Then Britain will make a sharp turn right, as many other countries will. Which is exclusively due to the EU, and to all the domestic politicians across the entire spectrum who are so blind to the failings of the Union that the only option voters have if they want out is to choose right extremism.

To its north, the EU doesn’t seem to have much to worry about right now, but don’t you worry: they’ll think of something. Count for instance on Brussels to join Denmark in its Arctic land claims, and offend Moscow some more while they’re at it.

But the biggest failure is not even in politics outside of its own territory. The union rots from within. Which starts with its moral bankruptcy, obviously. If you allow yourself to be an active accomplice in the death of over 6000 East Ukrainians, and you simply look away as thousands of migrants die in the seas off your shores, it should not be surprising that you just as easily allow for a humanitarian crisis, like the one in Greece, to develop within your own borders. It comes with the territory, so to speak.

And make no mistake: this absence of moral values is something Europe in its present form will never be able to claim back. Never. The EU has shown itself to be a gross moral failure, and that’s it: the experiment is over. They can’t come back in 10 or 20 years and say: now we want it back, we’re different now. You’d need to have a whole new union, new rules and principles, and new leadership.

It’s like the US, which once (post WW) had an enormous moral high ground in the world to walk on, and it’s completely gone. Nobody trusts anything America says anymore. America has lost its place in the world as guardian of freedom and democracy, and so has Europe. All they can do now to exert influence is to engage in political scheming and military sabre rattling. Everything else is gone.

What will undo Europe from within is its economic policies. Which are strongly linked to the same moral values issue: inside a union, you cannot let thousands of people go without food and health care while others, a few hundred miles away, drive new Mercs and Beamers over a brand new Autobahn. That’s not a union. That’s a feudal society. And those don’t hold.

In practical terms: Mario Draghi will launch ECB Q€ this month, and it will be as dismal a failure as the entire eurozone project. Because the ECB will need to drop interest rates into very negative territory to keep the ship afloat a little longer, and because Draghi won’t find the sovereign bonds he wants to buy, available in the market.

If Draghi acted in the interest of the entire eurozone and all its citizens, he’d be busy restructuring bank debt in Germany, France, Italy, Belgium, all over the eurozone, instead of playing these monopoly money games. But Draghi’s only pumping more ‘wealth’ into the broke banking system, €1.1 trillion more, to be specific.

Eventually, this refusal to restructure a a bankrupt system will bring bail-ins like the one playing out in Austria right now, closer, across the currency zone (though mostly not before 2016). And by the time that process spreads to ever more banks, which is inevitable, it will have consequences Draghi cannot oversee. And they’ll be of his own making. If he just did his work today, and forced banks to get healthy or close down, it wouldn’t end nearly as messy and chaotic.

Europe’s leaders across all of its institutions are completely lost, whether it comes to intelligence, morals or simple decency. They’re all too willing to trample upon their own people in order to have access to power. And that can only lead to more misery.

Stick a fork in their ass and turn them over. They’re done.

Jun 232014
 
 June 23, 2014  Posted by at 1:12 pm Finance Tagged with: , , ,  


Russell Lee Young flood refugee in schoolhouse, Sikeston, Missouri January 1937

Can you see what’s wrong with this picture? Over the weekend, the US released $572 million in ‘military aid’ to Egypt, at the same time that an Egyptian court confirmed the death sentences for 183 Muslim Brotherhood members/supporters, a Canadian and an Australian journalist were sentenced to 7-10 years maximum security prison for a conspiracy “to tarnish Egypt’s reputation and aiding the Muslim Brotherhood”, while 15 others, including two British and one Dutch journalists, got 10 years each in absentia on similar charges.

And “we” are handing them tanks and Apache helicopters? At the very moment journalists from fellow NATO member countries are being thrown in jail on opaque and convoluted charges? Excuse me? Ever heard of timing everything?

John Kerry Voices Strong Support for Egyptian President Sisi

Secretary of State John Kerry voiced strong U.S. support for Egypt’s new president and signaled that Washington will continue the flow of military aid in an American welcome of the post-coup government. Mr. Kerry is the most senior Obama administration official to meet Abdel Fattah Al Sisi, the former commander of the Egyptian armed forces, since his inauguration as president earlier this month. The American diplomat stressed that Washington was eager to kick-start its strategic relationship with Cairo anew. Mr. Kerry said that the U.S. had recently released $575 million in assistance for Egypt’s military and that he was confident 10 Apache helicopters would be delivered to Egypt soon. [..]

Note that Morsy (or Morsi, Mursi), about whom I have no opinion to express, was an elected president. “We” don’t seem to like those much lately, do we? Here’s some factoids, starting with the Wall Street Journal:

Egypt Court Upholds 183 Death Sentences

An Egyptian court upheld the death sentences against Muslim Brotherhood leader Mohamed Badie and 182 of the group’s supporters Saturday. They were among hundreds of people found guilty in April of taking part in a deadly attack on a police station last year. The incident occurred after sit-ins supporting deposed President Mohamed Morsy at squares in Cairo were broken up. “Of 683 defendants in the case, 183 were sentenced to death, four were sentenced to life imprisonment and 496 defendants were acquitted,” at Minya Criminal Court, state-run Ahram Online reported.

183 death sentences shirks eerily close to organized genocide. And I know the US is the only “civilized” nation that still has enthusiasm for executing its citizens, but 183 is a crazy number that reeks of political games far more than criminal activity. But of course we could claim that’s an internal Egyptian affair to decide. A claim we can’t make when it comes to our own journalists. Or are Australia, Canada, Britain and Holland perhaps not “our own” enough? Would Obama have refused the mass arms shipments to today’s flavor in power in Egypt if American journalists were involved?

Egypt Court Jails Al Jazeera Journalists For 7-10 Years

An Egyptian judge sentenced three Al Jazeera journalists on Monday to seven years in jail after finding them guilty on charges including helping a “terrorist organisation” by publishing lies. The three include Australian Peter Greste, Al Jazeera’s Kenya-based correspondent, and Canadian-Egyptian national Mohamed Fahmy, bureau chief of Al Jazeera English. A third defendant, Egyptian producer Baher Mohamed, received an additional three-year jail sentence on a separate charge involving possession of weapons. Another 11 defendants were sentenced in absentia to 10 years.

Canada’s Globe and Mail published this on the trial recently, before the sentences were delivered:

Footage Of Sheep, Australian Rock Song Part Of Prosecution’s Case Against Egyptian-Canadian Journalist

“They hand-picked only one side of the story,” Mr. Fahmy’s brother, Adel Fahmy, said in a telephone interview from Cairo after the Thursday hearing ended. The clips that were displayed to the judge, he said, were selected to include interviews with people who support the Muslim Brotherhood and footage of protests against former army chief Abdel Fattah el-Sisi, the front-runner in next week’s presidential election. But prosecutors left out interviews that the Al Jazeera team had conducted with people who are supportive of the existing regime, said Adel Fahmy.

Much of the evidence presented was “ridiculous,” said Adel Fahmy. It included, without explanation, a grainy recording of the hit song Somebody That I Used to Know by the Australian musician Gotye, as well as audioclips of people telling jokes, videos of sheep, footage from other correspondents, and a documentary about football in Egypt that Mr. Greste told the judge demonstrates the journalists’ willingness to portray the country as being stable under the current military rulers. [..] U.S. President Barack Obama and other world leaders demanded the release of the journalists.

And it’s not as if the White House didn’t know. From the WSJ article quoted above:

On Saturday, an Egyptian court sentenced to death more than 180 members of the Brotherhood for allegedly attacking a police headquarters in southern Egypt and killing an officer and a civilian. The Egyptian government is also trying three journalists from the Qatar-based Al Jazeera television network and 17 co-defendants for allegedly conspiring with the Muslim Brotherhood to destabilize the Egyptian state. A verdict in the case is expected on Monday.

Mr. Kerry said that he raised these issues with Mr. Sisi during a nearly two-hour session in the presidential palace in Cairo. The U.S. diplomat stressed that Mr. Sisi needed more time to address U.S. and international concerns about these cases. “He gave me a very strong sense of his commitment to make certain that the process he has put in place, a re-evaluation of human-rights legislation, a re-evaluation of the judicial process, and other choices that are available are very much on his mind,” Mr. Kerry said.

That last paragraph is a great depiction of what “we” have become. The US doesn’t stand for anything anymore, including the protection of its own people (and I do count journalists from NATO countries as our own people). But it’s not just the US. This is from an AP piece after the journalists’ verdicts:

Western governments and rights groups have voiced concern over freedom of expression in Egypt since Mursi’s ouster and the crackdown has raised questions about Egypt’s democratic credentials three years after an uprising toppled Hosni Mubarak after 30 years in power and raised hopes of greater freedoms. “This is a deeply disappointing result. The Egyptian people have expressed over the past three years their wish for Egypt to be a democracy. Without freedom of the press there is no foundation for democracy” Britain’s ambassador to Egypt, James Watt, told Reuters after the verdict. Australia’s ambassador Ralph King also said his prime minister would make his disappointment clear after entreaties made by his government in recent days appeared to make little difference.

Instead of Britain and Australia expressing outrage over both the sentences AND Obama’s decision to hand $570 million worth of weapons to the regime that delivers the sentences, both say they’re “disappointed”. Woe be the Brits or Aussies who find themselves on the wrong side of a line their government arbitrarily draw at any given point in time that’s entirely at their discretion. You’re on your own, guys.

And I know that violent movements are once again rising in Iraq and elsewhere, and I’ve seen Obama and Kerry and Bush and Cheney and Blair’s inane claims that they never had nothing to do with none of the unrest. But even then, refusing to stand up for your own people crosses a line that frankly disgusts me.

How hard would it have been for Kerry to tell, what’s his face, Sisi, that he can can have his guns and helicopters, and support “our” cause, but only after he releases at least all westerners involved in that grotesque Al Jazeera court case? Not hard at all. So what’s going on? Does the White House maybe hate Al Jazeera as much as Egypt does? Or is this about all journalists in general who don’t toe the party line? And of course there’ll be voices who say that it’s all difficult, and diplomacy is hard etc., but it’s really not. All Obama needs to do is say give me my people back or I’ll take those $572 million worth of guns and point them at you.

We know that the truth vanished from Washington long ago. Now we find that the last scrap of morality did too.

Oh, and the world of finance today? Stocks are held up by behemoth buybacks in the US and Japan, while the latter also moves record amounts of pension funds into the stock market. The most striking line today came in a Bloomberg article on Yellen controlling bond markets, and said: “Bond Vigilantes Have All Been Quieted”. They won’t be quiet forever, promise, unless they keep being fed free money forever. Fed by the Fed.

US Stock Buybacks Near 2007 Peaks (TPit)

Buybacks peaked precisely at the top of the market in Q3 2007 then plunged over 80%. By Q2 2009, when stocks were cheapest, buybacks had nearly stopped. It seems like a clockwork of bad timing: buybacks soar when stocks go into bubble mode and collapse when stocks get cheap. But the relationship works the other way around. The purpose of buybacks is to use shareholder equity to manipulate up the stock price. It works in three ways: one, through the sheer buying pressure – especially easy during these times of super-low trading volume; two, through this form of financial engineering that boosts earnings per share by lowering the share count, though it does nothing for actual earnings; and three, through the hype surrounding the buyback announcements and even the whispers of them.

And it works even when, as for example in IBM’s case, revenues and actual earnings are crummy for two years in a row, and when the stock should be roasting in purgatory. At every earnings announcement, the stock plunges, but then over the next three months, mirabile dictu, the share price rises again, fired up by buybacks. The Wall Street hype machine uses them as bait. Investors swallow them hook, line, and sinker. But that’s all buybacks do. What they don’t do is generate future revenues and earnings, unlike R&D or capex or any of the other productive activities companies undertake. In this way, the moolah blown on buybacks simply disappears as a driving force from the economy – an issue that has been dogging the US for two decades, as the range-bound chart above shows.

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Record Japan Buybacks Salvaging Stocks (Bloomberg)

Japanese businesses left behind this year as global equities rallied to a record found a winning strategy in buying back shares the rest of the world preferred to avoid. Companies in the Topix index are acquiring their own stock at the fastest pace ever, led by NTT Docomo and Toyota., with $25 billion of announced purchases so far this year, data compiled by Bloomberg show. The buybacks are limiting losses in the world’s worst-performing developed equity market: Companies using the strategy have gained even as the Topix slid. The combination of record cash, cheap shares and a government-led drive to buoy return on equity is making buybacks irresistible to Japanese executives at a time when the MSCI All-Country World Index is trading at unprecedented highs.

Mitsubishi Corp. rose 6.2% this year through last week, compared with the Topix’s 2.6% drop. Japan’s biggest trading company said on May 8 it would buy back as much as 60 billion yen ($589 million) of shares, the most in seven years. “It’s a pretty big sea change,” said Kieran Calder, head of equities for Asia at Coutts & Co., which manages about 28.5 billion pounds ($48.6 billion). “Corporate mindsets are definitely changing,” he said. “It makes Japan more of a normal market.” The Topix dropped as much as 13% this year amid growing doubt Prime Minister Shinzo Abe will make good on promises for reforms from loosening labor laws to reducing government support for farmers. The index is down this year after a world-beating 51% jump in 2013.

Foreign investors, which account for about 60% of market turnover, reduced holdings of Japanese shares in all but one month this year just as buybacks surged. Companies that announced purchases worth more than $100 million this year climbed an average 4.1% in 2014 through June 20. “Share buybacks have the effect of supporting the market when it’s weak,” Daiwa Securities Group Inc. quantitative analyst Masahiro Suzuki wrote in a report on June 10. “Return to shareholders is a big theme.”

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Bond. James Bond.

Sovereign Debt The ‘Ultimate Bubble’ (CNBC)

A bubble currently brewing in sovereign debt will likely burst in the next couple of years, U.S. billionaire Wilbur Ross warned on Monday. “I’ve felt for some time that the ultimate bubble, when we look back a few years from now, is going to be sovereign debt, both U.S. and other, because it’s way below any sort of reversion to the mean of interest rates,” the distressed debt investor told CNBC. “If you look at where the U.S. 10-year had averaged over the 10 preceding years, it’s around 4 percent. If it reverts back to that level at some point there will be terrible losses in the long-term Treasury market and those will probably be accentuated in other areas of fixed income.”

Ross argued that slowing issuance of assets like mortgage-backed securities and long-term Treasurys post-credit crisis, had helped to insulate the market from the full impact of the Federal Reserve’s gradual slowdown of quantitative easing – a process known as tapering. Investors have to “build in refinancing risk” when buying assets at the moment, he said The amount of cheap money in the market, as a result of quantitative easing by both the Fed and its European counterpart the European Central Bank (ECB), has been credited with the resurgence in investment in assets like peripheral euro zone bonds.

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“All on red” doesn’t even begin to cover this wager.

Pension Money Already Flowing In To Prop Up Japan’s Stocks (Zero Hedge)

With almost metronomic regularity, Japan will gush forth a headline proclaiming the ever-closer time when all the nation’s retirees savings will be greatly rotated to the stock market and away from the nation’s largest bond market in the world. This week was no exception; however, as Nikkei Asian Review reports, it appears the “all-talk” has turned to action…The Government Pension Investment Fund and other public pensions sold about 1.8 trillion yen ($17.4 billion) more in Japanese government bonds than they bought in the first three months of the year, fueling speculation that the GPIF may be rebalancing its portfolio sooner than expected. It seems rotating away from government bonds (which the GPIF has been worried about since 2011) into junk bonds and junk stocks is a far better use of ‘wealth’ – we can only imagine the GPIF risk models just got switch to ’11’. As we explained last year, Japan’s Plan B is not only not a panacea, but it is a House of Bonds Cards that would not survive an even modest gust of wind, and an even more modest contemplation into its true internal dynamics. We would urge Messrs Abe and Kuroda to come up with a fall back plan to the fall back plan before it, once again, becomes too late.

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Bond Vigilantes Have All Been Quieted (Bloomberg)

As the Federal Reserve works to extricate itself from the bond market, its influence over debt investors is only increasing and boosting the chance of a soft landing for Treasuries. While the Fed scales back the unprecedented stimulus that has inundated the world’s largest economy with more than $3 trillion of cheap cash, the differences between short- and long-term yields of U.S. government bonds indicate that investors are confident Fed Chair Janet Yellen can keep inflation in check as growth rebounds without having to ratchet up interest rates. The relative calm clashes with forecasters who say investors have grown too complacent over the direction of central bank policy with consumer prices climbing the most in more than a year and signs of labor-market strength.

Bond bulls are instead focusing on the Fed’s reduced estimate for how high rates ultimately need to rise and echoing the view of PIMCO’s Chief Economist Paul McCulley, who said this month the taming of inflation starting in the 1980s means there’s little risk in keeping borrowing costs low. “The market is giving the Fed the benefit of the doubt that Yellen and crew have everything under control,” Robert Tipp, the chief investment strategist at Prudential Financial Inc.’s fixed-income unit, which oversees about $335 billion, said in a June 19 telephone interview. “Inflation is not overheating even with job growth stable and the economy continuing to accelerate.” In the past 13 months, the gap between yields of two- and five-year Treasuries has doubled to 1.22 percentage points, according to data compiled by Bloomberg. At the same time, the difference between those of five- and 30-year securities has narrowed to the least since 2009 as the long bond rallied.

Because yields on longer-dated debt usually rise more than shorter-term notes when investors see faster inflation spurring rate increases, the moves suggest a more sanguine outlook, according to Priya Misra, the New York-based head of U.S. rates strategy at Bank of America, one of 22 primary dealers obligated to bid at U.S. debt auctions. Taken together, the relationship now implies that while investors anticipate the Fed will eventually lift its benchmark rate after holding it close to zero for six years, they don’t foresee the central bank’s stimulus measures creating the kind of inflationary pressures that would force its hand, she said. “The bond vigilantes have all been quieted,” Misra said by telephone on June 19. “The idea that just the act of printing money gets you inflation has been debunked.”

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Story for your grand kids: there once was a time when people borrowed all they wanted.

Automakers Crowding Banks Out Of US Car Loan Market (Reuters)

U.S. banks looking to get in on a booming market for financing new-car sales have run into a formidable competitor: the auto manufacturers themselves. Financing arms of car companies, including Toyota, Honda, and Ford, made half of all new U.S. car loans in the first quarter, up from 37% a year earlier and the largest%age of the market in four years, according to credit data firm Experian. These companies also write the vast majority of leases, which contributed a record 26% of new car sales in the quarter, up from 23% last year and 20% in 2012. The financing arms are providing subsidies from the manufacturers, lowering monthly payments and extending loan terms to make it easier for buyers to drive away in a shiny, new vehicle. As a result, major banks are increasingly moving into riskier parts of the market to make loans.

US Bancorp, for example, for the first time ever decided to start financing used cars, an area of the market that the automakers’ finance companies have little interest in. It also started offering loans to less creditworthy borrowers. And Wells Fargo has been leveraging off a nationwide deal with General Motors to provide loans subsidized by the No. 1 U.S. automaker. Wells sees this as a way to gain more of the used car loan business at GM dealerships. The aggressive push by car companies is beginning to raise questions among industry analysts and consultants about whether it is sustainable. If interest rates rise, the automakers could find the incentives too costly unless they are prepared to take a hit to profits—with any pullback in the deals being offered customers running the risk of hurting demand. And, if used car prices weaken, the financing units could be hit with losses on vehicles coming back from leases and repossessions.

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And now Asia borrows too. Hey, their savings are gone, remember?

Are Asian Households Over Their Head In Debt? (CNBC)

Household debt in Asia is growing quickly, spurring concerns that consumers may struggle to pay their bills as interest rates show signs of heading higher. “In the last several years, consumer debt has surged across the region, financing not only purchases of new, flashy condos, but also of cars, motorcycles, and everything else the heart desires,” Frederic Neumann, an economist at HSBC, said in a note Friday. Singapore and Thailand have seen credit growth exceeding that of the U.S. during its boom, while Malaysia, China, Hong Kong and Korea have seen a bigger increase than in the U.K. during the 2001-2007 runup to the financial crisis, he said, noting academic studies suggest the pace of increase matters more in generating financial risks than the absolute level.

In what may be a sign that Singapore’s credit surge is weighing on consumers, pawnshops are on the rise in the city-state. Pledges at Singapore’s pawnshops rose to 4 million in 2012 from 2.7 million in 2007, while loans surged around 344% over the same period to 7.1 billion Singapore dollars in 2012, according to a report last month from OSK-DMG. “The trend is likely to continue due to a few factors such as the availability of cheap credit fuelled by easy monetary policies from central bankers in advanced economies since the global financial crisis,” analysts Jarick Seet and Terence Wong said in the report, starting coverage of the pawnbroker sector at Overweight. While the 2010 opening of the city-state’s casinos is likely a key driver for pawnshops’ growth, Seet and Wong also believe that the government’s clampdown on unsecured lending and credit cards means more borrowers are facing difficulties with debt payments and are turning to their local pawnbrokers.

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Chinese Switch From Cash To Credit To Buy Cars (CNBC)

In a country where owning a car has long been a symbol of luxury and success, around 85% of Chinese car buyers still buy cars with cash. But people like Chinese accountant Grace Mi and her peers in their 20s and 30s are changing the car financing game and are the ones catching the attention of global carmakers looking to boost revenue and defend margins in an increasingly competitive market. These young people are willing to buy big-ticket items like a car on credit – a behavior unheard of some 15 years ago in China – and have led carmakers to boost their financing units in the mainland. The push by automakers to steer more people to buy on credit comes as part of their broader efforts to make up for sliding margins on new-car sales in China where more companies are cutting prices to entice buyers.[..]

Around 70% of car buyers in the United States and other developed countries take out loans, according to a Deloitte report in 2012 and the reason global carmakers are trying to seize on the rise in auto financing in China is because the sector is highly profitable. The financing unit of Ford Motor contributed nearly a quarter of the Deerborn, Michigan-based company’s overall profit last year while rival GM saw 12% of its profit come from its finance unit. “China’s car market remains primarily a cash market, but it is starting to move to credit,” John Lawler, head of Ford’s operations in China, told Reuters in an interview. “It’s a demographic and generational phenomenon. Those people who finance cars are primarily younger buyers.”

China’s central bank gave the sector a boost in early June when it cut the amount of money auto financing firms need to set aside as reserves in a bid to stimulate the economy which is showing signs of slowing. Global carmakers have been funding their financial units’ expansion by selling off their loans in the form of asset-backed securities to beef up their operations in China. That frees up money they can use to lend to Chinese consumers. So far this year, the financing units of Ford, BMW, Volkswagen, Nissan and Toyota have each issued around 800 million yuan ($128.85 million) of asset-backed securities.

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Good counterweight to the happy happy China numbers coming out today.

China Beige Book, Manufacturing PMI Paint Opposing Pictures Of Economy (ZH)

S&P 500 futures are jumping exuberantly as Japan and China PMIs print above expectations and back in expansion territory (Japan best in 3 months, China best in 7 months). This is China’s best 2-month PMI rise since Oct 2010 (which makes perfect sense amid the collapsing housing market and CCFD ponzi probe) – which provides the perfect propaganda meme that targeted RRR cuts workl. However, while stocks don;t care to scratch the surface, there are 2 glaring similarities that could become a problem. Both China and Japan saw employment drop (Japan’s first in 11 months) and furthermore both China and Japan saw input prices rise and output prices decline – not exactly the margin expansion dream everyone is hoping for… and all this as China’s Beige Book shows the slowdown deepening on weak investment.

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“The banks still haven’t looked under the hood.” Wow! They’ve been looking for weeks now, and they still haven’t found their stuff? That’s scary. Every bank involved has had their guys in Qingdao for a month. They can’t find a thing?

Qingdao Fraud Probe Leaves China’s Warehouse Sector Under Scrutiny (Reuters)

Shaken by a fraud investigation into metal financing in the world’s seventh-busiest port, banks and trading houses have been made painfully aware of the risks they face storing commodities in China’s sprawling warehouse sector. The probe at Qingdao port centers around a private metals trading firm suspected of duplicating warehouse certificates in order to use a metal cargo multiple times to raise financing. Some banks have asked clients to shift metal, used as collateral for loans, to more regulated London Metal Exchange (LME) warehouses outside China or those owned and operated by a single warehouse firm to limit their exposure. “The banks still haven’t looked under the hood,” said an executive at a bank involved in commodity financing in China, referring to China’s warehousing sector.

At the heart of the issue is China’s roaring commodity financing business, which has helped drive up stockpiles of commodities at ports to record levels, stored in warehouses not always regulated to the same extent as elsewhere. Though many global firms are involved in the warehouse industry in China, there has been outsourcing to local firms to cut overheads and avoid dealing with complex local regulations. Using commodities as collateral in financing in China is common practice and not illegal, but issuing receipts to repeatedly mortgage an asset is fraud and could leave more than one creditor holding claims to the same collateral. Illustrating how difficult it may be to unravel competing claims, China’s CITIC Resources said that a court had been unable to secure more than 100,000 tonnes of alumina stored at Qingdao port. Traders said there was a risk the metal could have been already claimed before part of Qingdao Port was sealed off, adding that at least two trading houses had moved metal out as soon as news of the scandal broke.

In Qingdao, sources with knowledge of the probe said authorities were looking at whether the firm under focus, Decheng Mining, had secured multiple warehouse receipts because an affiliate managed logistics at the port’s Dagang bonded zone. “Warehouse receipts are not title documents, they are documents of entitlement. But they are being used as title documents for sales and purchase and transfer of ownership,” said a person at a warehouse company with operations in Qingdao. “Everywhere else outside of China, a warehouse receipt is cut for one party.” [..]A warehouse operator and a banker said agreements with clients meant there could be limited liability for a cargo, capping a payment at around $100,000, depending on specific terms and conditions. For example, a shipment of 10,000 tonnes of copper would be worth about $68 million at current prices.

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Hussman, always good for a solid perpective.

This Time is Different, Yet with the Same Ending (Hussman)

There is one critical feature of the market advance of recent years that differs from prior bull market advances, and while it’s related to quantitative easing, the distinction is not quite as simple as that. In the market advances that culminated in the 1929, 1972, 1987, 2000 and 2007 pre-crash peaks, a combined syndrome of overvalued, overbought, overbullish conditions emerged in each instance. These syndromes can be defined in numerous and largely overlapping ways, but in general, once these syndromes appeared, steep market losses typically followed in fairly short order. In instances where they didn’t, the syndrome was usually a one-off outlier driven by a short spike in bullishness. Still, in no case did one observe repeated, increasingly severe overvalued, overbought, overbullish syndromes persisting entirely uncorrected and without consequence.

The fact that there have been no historical exceptions to this pattern prior to the recent half-cycle has posed quite a challenge for us in recent years. It forced us to adapt by imposing restrictions (based on factors such as market action across a range of risk-sensitive instruments) to mute our defensiveness even in conditions where historically-informed measures of prospective market return/risk are blazing red. We don’t get to re-live the recent cycle in a way that shows the effectiveness of any of that, but I expect it to be evident enough over the completion of the present cycle and the ones that follow, even in the event quantitative easing becomes a more frequent policy (though the unwinding challenges appear likely to make the whole episode regrettable).

The Federal Reserve’s policy of quantitative easing has produced a historically prolonged period of speculative yield-seeking by investors starved for safe return. The problem with simply concluding that quantitative easing can do this forever is that even speculative assets have to compete with zero. When a safe zero return is above the medium or long-term return that one can estimate for a very risky asset, the rationale for continuing to hold the risky asset becomes purely dependent on expectations of immediate short-term price gains. If speculative momentum starts to break, participants often try to get out the door simultaneously – especially if there is some material event that increases general aversion to risk. That’s the dynamic that produces market crashes.

I’m not saying a market crash is imminent, but it is a risk because very reliable valuation methods (that have remained reliable even in the recurring bubbles since the late-1990’s) presently estimate negative prospective nominal total returns for the S&P 500 on every horizon of 7 years or less, and an annual total return of about 1.9% over the coming decade.

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France is the new Greece.

French Manufacturing, Services Reveal Risk for Europe’s Recovery (Bloomberg)

French manufacturing and services contracted for a second month in June, highlighting the euro area’s struggle to sustain its economic recovery. A Purchasing Managers Index for both industries in the region’s second-largest economy decreased to 48.0 from 49.3 in May, Markit Economics said today in London. Economists had forecast an unchanged reading, according to a Bloomberg News survey. A reading of 50 or higher signals expansion. The French economy has fared worse than that of the euro area for the past three quarters and added to concern of policy makers at the European Central Bank, who unveiled unprecedented stimulus earlier this month to rekindle growth and boost prices in the 18-nation region.

The International Monetary Fund gave a bleak assessment of the euro economy last week, noting that output is still below pre-crisis levels, unemployment “unacceptably high” and inflation “worryingly low.” “There remained little sign of any turnaround in the performance of France’s economy at the end of the second quarter,” said Paul Smith, senior economist at Markit. “On these trends, the economic underperformance of France seems set to persist well into” the second half of the year, he said.

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The Chinese buy up America with freshly printed Monopoly money. What’s not to like about that?

Ni Hao, Y’all: US Hinterlands Woo Chinese Firms (AP)

Burdened with Alabama’s highest unemployment rate, long abandoned by textile mills and furniture plants, Wilcox County desperately needs jobs. They’re coming, and from a most unlikely place: Henan Province, China, 7,600 miles away. Henan’s Golden Dragon Precise Copper Tube Group opened a plant here last month. It will employ more than 300 in a county known less for job opportunities than for lakes filled with bass, pine forests rich with wild turkey and boar and muddy roads best negotiated in four-wheel-drive trucks. “Jobs that pay $15 an hour are few and far between,” says Dottie Gaston, an official in nearby Thomasville.

What’s happening in Pine Hill is starting to happen across America. After decades of siphoning jobs from the United States, China is creating some. Chinese companies invested a record $14 billion in the United States last year, according to the Rhodium Group research firm. Collectively, they employ more than 70,000 Americans, up from virtually none a decade ago. Powerful forces — narrowing wage gaps, tumbling U.S. energy prices, the vagaries of currency markets — are pulling Chinese companies across the Pacific. Mayors and economic development officials have lined up to welcome Chinese investors. Southern states, touting low labor and land costs, have been especially aggressive. In the case of the Pine Hill plant, tax breaks, some Southern hospitality and a tray of homemade banana pudding helped, too. “Get off the plane and the mayor is waiting for you,” says Hong Kong billionaire Ronnie Chan.

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The US Healthcare System: Most Expensive Yet Worst In The Developed World (ZH)

One month ago we showed that when it comes to the cost of basic (and not so basic) health insurance, the US is by far the most expensive country in the world and certainly among its “wealthy-nation”peers (in a world in which indebtedness is somehow equivalent to wealth), which in the context of the irreversible socialization of American healthcare, was in line with expectations. It would be logical then to think that as a result of this premium – the biggest in the world – the quality of the healthcare offered in the US among the best, if not the best, in the world. Unfortunately, that would be wrong and, in fact, the reality is the complete opposite: as a recent study by the Commonweath Fund, looking at how the US healthcare system compares internationally, finds, “the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity.” In other words: most expensive, yet worst in the developed world.

From the report: “The United States health care system is the most expensive in the world, but this report and prior editions consistently show the U.S. underperforms relative to other countries on most dimensions of performance. Among the 11 nations studied in this report—Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States—the U.S. ranks last, as it did in the 2010, 2007, 2006, and 2004 editions of Mirror, Mirror. Most troubling, the U.S. fails to achieve better health outcomes than the other countries, and as shown in the earlier editions, the U.S. is last or near last on dimensions of access, efficiency, and equity. In this edition of Mirror, Mirror, the United Kingdom ranks first, followed closely by Switzerland.”

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Anyone surprised?

Poverty Hits Twice As Many British Households As 30 Years Ago (Guardian)

The number of British households falling below minimum living standards has more than doubled in the past 30 years, despite the size of the economy increasing twofold, a study on poverty and deprivation in the UK claims . According to the study, 33% of households endure below-par living standards – defined as going without three or more “basic necessities of life”, such as being able to adequately feed and clothe themselves and their children, and to heat and insure their homes. In the early 1980s, the comparable figure was 14%.

The research, billed as the most detailed study ever of poverty in the UK, claims that almost 18 million Britons live in inadequate housing conditions and that 12 million are too poor to take part in all the basic social activities – such as entertaining friends or attending all the family occasions they would wish to. It suggests that one in three people cannot afford to heat their homes properly, while 4 million adults and children are not able to eat healthily. Having someone in the household in work does not prevent British families from facing tough living conditions, according to the research, undertaken by the Poverty and Social Exclusion project (PSE). It found that many households that were struggling had at least one adult in work. Experts who produced the research, which will be discussed at a conference in London on Thursday, are calling on the government to take action to counter the problems they have pinpointed.

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Scary as all hell.

Out Of Control Ebola Outbreak Just ‘Tip Of The Iceberg’ (NBC)

An “out of control” outbreak of Ebola in West Africa that’s being called the deadliest ever is far from over and it’s likely to get worse before it gets better, experts predict. And health workers who have been fighting the outbreak, which spans three countries and has killed more than 300 people, say they are certain many cases are going unreported as they see gruesome infections, dangerous myths and people fleeing the virus, potentially spreading it further. “This is the tip of the iceberg,” said Robert Garry, a microbiology professor at the Tulane University School of Medicine who’s been leading relief and investigation efforts in Sierra Leone for the Viral Hemorraghic Fever Consortium. Dr. Mwayabo Kazadi, from the health unit for Catholic Relief Services, agreed that many cases could go uncounted and undiagnosed in the region, where Guinea, Sierra Leone and Liberia come together. “When you don’t have a proper health system in place, it is pretty difficult,” Kazadi said.

Garry says team members arrived in at least one village to find it deserted, and the body of an Ebola victim left unattended in a house. It’s not hard to imagine what happened, but it makes it impossible to track down people who might have been infected and get them to hospitals for what care can be provided, and to prevent them from infecting others. A Doctors Without Borders official said Friday that the outbreak was out of control. And the numbers make it clear this is the biggest outbreak yet of Ebola since the virus was first identified in 1976. The virus, which causes a particularly nasty form of hemorrhagic fever, has killed 337 people out of 528 infected. “This is the biggest outbreak we have ever actually seen of Ebola,” Kazadi said. “It’s the biggest both in numbers and in terms of geography,” Garry agreed.

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